The following events occurred over the course of a year at Bagby Corp., which uses a...

The following events occurred over the course of a year at Bagby Corp., which uses a job order costing system:

1. Direct materials purchases totaled $460,000.

2. $230,000 of indirect materials were used in production. Bagby uses a separate Supplies Inventory account for indirect materials.

3. $415,000 of direct materials were used in production.

4. The direct labor payroll was $940,000 (credit Wages Payable).

5. Other manufacturing overhead costs incurred during the year totaled $540,000.

6. Bagby applies overhead based on a predetermined overhead rate of $15 per machine hour. The company used 50,000 machine hours during the year.

7. During the year, Bagby transferred goods costing $2,100,000 into the Finished Goods Inventory account.

8. Bagby sold products with a manufacturing cost of $2,050,000 to customers during the year.

Required

a. Prepare journal entries to record these events.

b. Prepare T-accounts for the following accounts: Direct Materials Inventory, Work in Process Inventory, Manufacturing Overhead Control, and Finished Goods Inventory. Record the transactions from part (a) in the T-accounts and calculate ending account balances. Assume the following beginning account balances: Account Balance Direct Materials Inventory $20,000 Work in Process Inventory $12,000 Finished Goods Inventory $35,000

c. Was overhead under- or overapplied for the year? By how much?

Expert Solution

ekkarill92 answered 9 months ago

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