Question

Bunnell Corporation is a manufacturer that uses job-order costing. On January 1, the company’s inventory balances were as follows:

Raw materials	$	63,000
Work in process	$	22,200
Finished goods	$	52,500

The company applies overhead cost to jobs on the basis of direct labor-hours. For the current year, the company’s predetermined overhead rate of $11.50 per direct labor-hour was based on a cost formula that estimated $460,000 of total manufacturing overhead for an estimated activity level of 40,000 direct labor-hours. The following transactions were recorded for the year:

1. Raw materials were purchased on account, $618,000.
2. Raw materials used in production, $569,400. All of of the raw materials were used as direct materials.
3. The following costs were accrued for employee services: direct labor, $410,000; indirect labor, $150,000; selling and administrative salaries, $338,000.
4. Incurred various selling and administrative expenses (e.g., advertising, sales travel costs, and finished goods warehousing), $382,000.
5. Incurred various manufacturing overhead costs (e.g., depreciation, insurance, and utilities), $310,000.
6. Manufacturing overhead cost was applied to production. The company actually worked 41,000 direct labor-hours on all jobs during the year.
7. Jobs costing $1,372,600 to manufacture according to their job cost sheets were completed during the year.
8. Jobs were sold on account to customers during the year for a total of $3,202,500. The jobs cost $1,382,600 to manufacture according to their job cost sheets.

4. What is the total amount of manufacturing overhead applied to production during the year?

5. What is the total manufacturing cost added to Work in Process during the year?

6. What is the journal entry to record the transfer of completed jobs that is referred to in item g above?

7. What is the ending balance in Work in Process?

Answer 1

Answer 4
The total amount of manufacturing overhead applied to production during the year = Actual direct labor hours worked x Pre-determined overhead rate
The total amount of manufacturing overhead applied to production during the year = 41000 direct labor hours x $11.50 per direct labor hour
The total amount of manufacturing overhead applied to production during the year = $4,71,500
Answer 5
The total manufacturing cost added to Work in Process during the year
Direct Material Used	$569,400.00
Direct Labor	$410,000.00
Manufacturing overhead applied	$471,500.00
Total manufacturing cost added to Work in Process during the year	$1,450,900.00
Answer 6
Journal entry to record the transfer of completed jobs
Account Titles	Debit	Credit
Finished Goods	$1,372,600.00
Work in process		$1,372,600.00
Answer 7
Calculation of ending balance in Work in process
Beginning balance Jan.1		$22,200.00
Add : Manufacturing Cost added during the year		$1,450,900.00
Less : Transfer of Completed Job		$1,372,600.00
Ending balance in Work in process		$100,500.00