Question

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

Raw materials	$	60,500
Work in process	$	20,800
Finished goods	$	57,600

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 $11.25 per direct labor-hour was based on a cost formula that estimated $450,000 of total manufacturing overhead for an estimated activity level of 40,000 direct labor-hours. The following transactions were recorded for the year:

a. Raw materials were purchased on account, $622,000.

b. Raw materials use in production, $591,800. All of of the raw materials were used as direct materials.

c. The following costs were accrued for employee services: direct labor, $400,000; indirect labor, $150,000; selling and administrative salaries, $280,000.

d. Incurred various selling and administrative expenses (e.g., advertising, sales travel costs, and finished goods warehousing), $400,000.

e. Incurred various manufacturing overhead costs (e.g., depreciation, insurance, and utilities), $300,000.

f. Manufacturing overhead cost was applied to production. The company actually worked 41,000 direct labor-hours on all jobs during the year.

g. Jobs costing $1,360,750 to manufacture according to their job cost sheets were completed during the year.

h. Jobs were sold on account to customers during the year for a total of $3,330,000. The jobs cost $1,370,750 to manufacture according to their job cost sheets.

1. What is the journal entry to record raw materials used in production?

2. What is the ending balance in Raw Materials?

	Raw Materials Beg. Bal. End. Bal. 0 0

3. What is the journal entry to record the labor costs incurred during the year?

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? do the same table as question number 2 please.

8. What is the total amount of actual manufacturing overhead cost incurred during the year?

9. Is manufacturing overhead underapplied or overapplied for the year? By how much?

10. What is the cost of goods available for sale during the year?

11. What is the journal entry to record the cost of goods sold referred to in item h above?

12. What is the ending balance in Finished Goods? do same table as in question number 2 please.

13. Assuming that the company closes its underapplied or overapplied overhead to Cost of Goods Sold, what is the adjusted cost of goods sold for the year?

14. What is the gross margin for the year?

15. What is the net operating income for the year?

Answer 1

1.The journal entry to record raw materials used in production is below

1	Work In process	$591800
	Raw materials		$591800

2)The ending balance in Raw Materials is below:

Ending Inventory Raw material = Opening Inventory + Purchases- Raw material used in production

=$60500+$622000-$591800 = $90700

3)journal entry to record the labor costs incurred during the year

1	Work In Process	$400000
	Manufacturing Overhead	$150000
	Selling and administrative salaries	$280000
	Wages Payable		$830000

4)Total amount of manufacturing overhead applied to production during the year

manufacturing overhead applied = Actual direct labor hours * predetermined overhead rate

=41000*$11.25 = $461250

5)total manufacturing costs = Direct material used+direct labor+manufacturing overheads applied

=$591800+$400000+$461250 = $1453050

6)Journal entry to record the transfer of completed jobs that is referred to in item g .

1	Finished Goods	$1360750
	Work In process		$1360750

7) Work in process Ending inventory = Beginning WIP + total manufacturing costs-Cost of goods manufactured

=$20800+$1453050-$1360750 = $113100

8)the total amount of actual manufacturing overhead cost incurred during the year = Indirect labor+ Depreciaton,utilities etc

= $150000+$300000 = $450000

9)MOH Actual $450000, MOH Applied = $461250

Under Applied MOH = $11250

10)cost of goods available for sale = Beginning Finished Goods + Cost of Goods manufactured

=$57600+$1360750 = $1418350

11)

1	Cost Of goods Sold	$1370750
	Finished Goods		$1370750

12)Ending Finished Goods Inventory = Begining Finished Goods Inventory + Cost of goods available for sale-Cost of goods sold

= $57600+$1360750-$1370750 = $47600

I have solved 12 bits for this problem.