Concept explainers
Bunnell Corporation is a manufacturer that uses job-order costing. On January 1, the company's inventory balances were as follows:
Raw materials..................................$40,000
Work in process................................$18,000
Finished goods...................................$35,000
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 $16.25 per direct labor-hour was based on a cost formula that estimated $650,000 of total manufacturing overhead for an estimated activity7 level of 40,000 direct labor-hours. The following transactions were recorded for the year:
- Raw materials were purchased on account, $510,000.
- Raw materials used in production, S480,000. All of of the raw materials were used as direct materials.
- The following costs were accrued for employee services: direct labor, $600,000: indirect labor, $150,000: selling and administrative salaries, $240,000.
- Incurred various selling and administrative expenses (e.g., advertising, sales travel costs, and finished goods warehousing), $367,000.
- Incurred various manufacturing overhead costs (e.g.. depreciation, insurance, and utilities). $500,000.
Manufacturing overhead cost was applied to production. The company actually worked 41,000 direct labor-hours on all jobs during the year.- Jobs costing $680,000 to manufacture according to their
job cost sheets were completed during the year. - Jobs were sold on account to customers during the year for a total of $2,800,000. The jobs cost $690,000 to manufacture according to their job cost sheets.
Required
11. What is the
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Chapter 3 Solutions
MANAGERIAL ACCOUNTING
- Verst Products Co. uses a process cost system and applies actual factory overhead to work in process at the end of the month. The following data came from the records for March: Direct materials. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $200,000 Direct labor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $100,000 Variable factory overhead. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 80,000 Fixed factory overhead. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 60,000 Selling and administrative expenses . . . . . . . . . . . . . . . . . . . . . . $ 40,000 Units produced . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25,000 Units sold. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,000 Selling price per unit . . . . . . . . . . . . . . . . . . .…arrow_forwardPremium Company is a manufacturing firm that uses job-order costing. The company's inventory balanceswere as follows at the beginning and end of the year: Beginning Balance Ending Balance Raw materials ........ P14,000 22,000 Work in process ...... 27,000 9,000 Finished goods ....... 62,000 77,000The company applies overhead to jobs using a predetermined overhead rate based on machine-hours. Atthe beginning of the year, the company estimated that it would work 33,000 machine-hours and incurP231,000 in manufacturing overhead cost. The following transactions were recorded for the year:• Raw materials were purchased, P315,000.• Raw materials were requisitioned for used in production,P307,000 (P281,000 direct and P26,000 indirect).• The following employee costs were incurred: direct labor,P377,000; indirect labor,96,000; and administrativesalaries, P172,000.Selling costs, P147,000.• Factory utility costs, P10,000. • Depreciation for the year was P127,000 of which P120,000 is related to…arrow_forwardSummit Company has provided the following inventory balances and manufacturing cost data for the month of January: Inventories: January 1 January 31 Direct materials ....... P30,000 P40,000 Work in process ........ P15,000 P20,000 Finished goods ......... P65,000 P50,000 Month of January Cost of goods manufactured ........ P515,000 Manufacturing overhead applied .... P150,000 Direct materials used ............. P190,000 Actual manufacturing overhead ..... P144,000 Under Summit's job-order costing system, any over or underapplied overhead is closed to the Cost of Goods Sold account at the end of the calendar year (i.e., December 31). 84. What was the total amount of direct material purchases during January? a. P180,000 b. P190,000 c. P195,000 d. P200,000 85. How much direct labor cost was incurred during January? a. P170,000 b. P175,000 c. P180,000 d.…arrow_forward
- Black Corporation, which applies manufacturing overhead on the basis of machine-hours, has provided the following data for its most recent year of operations. Estimated manufacturing overhead...................... $139,080Estimated machine-hours..................................... 3,800Actual manufacturing overhead ........................... $137,000Actual machine-hours .......................................... 3,780 The estimates of the manufacturing overhead and of machine-hours were made at the beginning of the year for the purpose of computing the company's predetermined overhead rate for the year. a.The predetermined overhead rate is closest to:b. The applied manufacturing overhead for the year is closest to:c.The overhead for the year was:arrow_forwardBakerston Company is a manufacturing firm that uses job-order costing. The company's inventory balances were as follows at the beginning and end of the year: Beginning Ending Balance Balance Raw materials ........ P14,000 P22,000 Work in process ...... 27,000 9,000 Finished goods ....... 62,000 77,000 The company applies overhead to jobs using a predetermined overhead rate based on machine-hours. At the beginning of the year, the company estimated that it would work 33,000 machine-hours and incur P231,000 in manufacturing overhead cost. The following transactions were recorded for the year: Raw materials were purchased, P315,000. Raw materials were requisitioned for used in production, P307,000 (P281,000 direct and P26,000 indirect). The following employee costs were incurred: direct labor, P377,000; indirect labor, P96,000; and administrative salaries,…arrow_forwardDetermining actual factory overhead:The books of Prestige Products Company revealed that thefollowing general journal entry had been made at the end of the current accounting period:Factory Overhead . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,000Under- and Overapplied Factory Overhead ...................... 2,000Closed credit balance in factory overhead control account. The total direct materials cost for the period was $40,000.The total direct labor cost, at an average rate of $10 per hour for direct labor, was one and one-half times the direct materials cost. Factory overhead was applied on the basis of $4 per direct labor hour. What was the total actual factory overhead incurred for the period? (Hint: First solve for direct labor cost and then for direct labor hours.)arrow_forward
- XYZ Corporation is manufacturing customized cabinets. The following data pertain to Job 101 for the month of May: Direct materials used....................................... P 10,200 Direct labor hours worked..................................... 200 Direct labor rate per hour............................... P 5.00 Machine hours used...................................... 100 Applied factory overhead rate per machine hour P 10.00 What is the total manufacturing cost recorded on Job 101 for the month of May?arrow_forwardParmitan Corporation has provided the following data concerning last month’s manufacturing operations.Purchases of raw materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $53,000Indirect materials included in manufacturing overhead . . . . . . . . . . . . . . . $8,000Direct labor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $62,000Manufacturing overhead applied to work in process . . . . . . . . . . . . . . $41,000Underapplied overhead . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $8,000Beginning EndingInventories: Raw materials . . . . . . . . . . . . . . . . . . . …$24,000 $6,000Work in process . . . . . . . . . . . . . . . . . . . ……………….$41,000 $38,000Finished goods . . . . . . . . . . . . . . . . . …………………. $86,000 $93,000Required:1. Prepare a schedule of cost of goods manufactured for the month.2. Prepare a schedule of cost of goods sold for the month.arrow_forwardJob order cost; journal entries; ending work in process;inventory analysisHidalgo Company manufactures goods to special order and usesa job order cost system. During its first month of operations, thefollowing selected transactions took place:a. Materials purchased on account ................................. $37,000b. Materials issued to the factory:Job 101 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,200Job 102 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,700Job 103 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,100Job 104 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,700For general use in the factory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,350c. Factory wages and salaries…arrow_forward
- Moody Corporation uses a job-order costing system with a plantwide predetermined overhead rate based on machine-hours. At the beginning of the year, the company made the following estimates: Machine-hours required to support estimated production . . . . . . . . 100,000Fixed manufacturing overhead cost . . . . . . . . . . . . . . . . . . . . . . . . . . . .$650,000Variable manufacturing overhead cost per machine-hour . . . . . . . . . . $3.00 Required:1. Compute the plantwide predetermined overhead rate.2. During the year, Job 400 was started and completed. The following information was available with respect to this job: Direct materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$450Direct labor cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $210Machine-hours used . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .40 Compute the total manufacturing cost assigned…arrow_forwardoody Corporation uses a job-order costing system with a plantwide predetermined overhead rate based on machine-hours. At the beginning of the year, the company made the following estimates: Machine-hours required to support estimated production . . . . . . . . 100,000Fixed manufacturing overhead cost . . . . . . . . . . . . . . . . . . . . . . . . . . . .$650,000Variable manufacturing overhead cost per machine-hour . . . . . . . . . . $3.00 Required:1. Compute the plantwide predetermined overhead rate.2. During the year, Job 400 was started and completed. The following information was available with respect to this job: Direct materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$450Direct labor cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $210Machine-hours used . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .40 Compute the total manufacturing cost assigned…arrow_forwardRundle Company and Rooney Company assign manufacturing overhead to Work in Process Inventory using direct labor cost. The following information is available for the companies for the year. Actual direct labor cost Estimated direct labor cost. Actual manufacturing overhead cost Estimated manufacturing overhead cost Rundle Company $ 148,000 153,000 Rundle Company Rooney Company 55,600 74,970 Required a. Compute the predetermined overhead rate for each company. b. Determine the amount of overhead cost that would be applied to Work in Process Inventory for each company. c. Compute the amount of overapplied or underapplied manufacturing overhead cost for each company. Complete this question by entering your answers in the tabs below. Required A Required B Required C Compute the predetermined overhead rate for each company. Note: Round your answers to 2 decimal places. Predetermined Overhead direct labor dollar direct labor dollar Rooney Company $ 173,000 105,000 91,100 90,300arrow_forward
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