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, $480,000. 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
6. What is the
Want to see the full answer?
Check out a sample textbook solutionChapter 3 Solutions
MANAGERIAL ACCOUNTING (LOOSE) W/CONNECT
- Premium 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_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_forwardBJ Manufacturing Company uses Job Order Costing system to accumulate production costs. At the beginning of the year, the balances of the inventory accounts are as follows: P168,000 210,000 Raw Materials Inventory Work in Process Inventory Job 101... Job 102 ... Finished Goods Inventory Job 005 .. Job 006 ... P105,000 105,000 182,000 P 85,000 97,000 The summaries of transactions for the year are as follows: (a) Raw Materials costing P826,000 were purchased on account. (b) Materials issued to production, P785,000 distributed as follows: Job 101 P180,000 Job 102 P125,000 Indirect balance Job 103 P150,000 Job 104 P205,000 Job 105 P95,000 (c) Heat, light and power, factory plant, for the year was P116,000. (d) Depreciation for factory plant for the year, P190,000 (e) Marketing and administrative expenses, P250,000 (f) Production wages for the year was P1,250,000 of which 20% is for indirect laborers. The direct wages were distributed as: Job 101, 15%; Job 102, 20%; Job 103, 25%; Job 104,…arrow_forward
- Moody Corporation uses a job-order costing system with a plantwide 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 . . . . . . 100,000 Fixed manufacturing overhead cost . . . . . . . . . . . . . . . . . . . . . . . . $650,000 Variable manufacturing overhead cost per machine-hour . . . . . . . $3.00 Required: 1. Compute the 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 requisitioned . . . . . . . . . . . . . . . . . . . . . . . . . . . . $450 Direct labor cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $210 Machine-hours used . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 Compute the total manufacturing cost assigned to Job 400. 3. During the year, the company worked a total of…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_forwardSelected information from the lowa Instruments accounting records for April follows: . . . Materials Inventory Debit BB (4/1) 25,800 209,800 Debit Credit 174,800 Cost of Goods Sold Credit 4,300 Work-in-Process Inventory Credit Debit Labor 92,400 EB (4/30) 91,800 Manufacturing Overhead Control Debit Credit 78,300 78,300 Finished Goods Inventory Debit Credit Additional information for April follows: The labor wage rate was $30 per hour. During the month, sales revenue was $320,400, and selling and administrative costs were $77,000. This company has no indirect materials or supplies. The company applies manufacturing overhead on the basis of direct labor-hours. • Customer returns are discarded and not resold. BB (4/1) P 87,800 284, 200 272,800 Applied Manufacturing Overhead Debit Credit 78,860 4,300 83,160 Required: a. What was the cost of direct materials purchased in April? b. What was the over- or underapplied manufacturing overhead for April? c. What was the manufacturing overhead…arrow_forward
- The following data (in thousands of dollars) have been taken from the accounting records of Karlana Corporation for the just completed year. Sales ........... Raw materials inventory, beginning........... Raw materials inventory, ending. $910 $80 $20 $100 $130 $200 $160 Selling expenses.......... $140 Work in process inventory, beginning....... $40 Work in process inventory, ending....... $10 Finished goods inventory, beginning......... $130 Finished goods inventory, ending.... $150 The cost of goods sold for the year (in thousands of dollars) was: Purchases of raw materials.... Direct labor........... Manufacturing overhead. Administrative expenses........ O $670 O $500 $540 O $650arrow_forwardJasper, Inc. reports the following cost information for March: Cost of Goods Manufactured Manufacturing Overhead Finished Goods Inventory, March 1 Finished Goods Inventory, March 31 Work-in - Process Inventory, March 1 Work-in-Process Inventory, March 31 Direct Materials Used What is the cost of goods sold for March? OA. $75,800 OB. $78,700 OC. $72,600 OD. $2,300 $74,200 18,900 4,500 2,900 9,900 1,300 26,500arrow_forwardOn April 1, Sangvikar Company had the following balances in its inventory accounts: Materials Inventory $12,730 21,340 Work-in-Process Inventory Finished Goods Inventory Work-in-process inventory is made up of three jobs with the following costs: Direct materials Direct labor Job 114 8,700 $2,411 1,800 1,170 Job 115 $2,640 1,560 1,014 Job 116 $3,650 4,300 2,795 Applied overhead During April, Sangvikar experienced the transactions listed below. a. Materials purchased on account, $29,000. b. Materials requisitioned: Job 114, $16,500; Job 115, $12,200; and Job 116, $5,000. c. Job tickets were collected and summarized: Job 114, 150 hours at $12 per hour; Job 115, 220 hours at $14 per hour; and Job 116, 80 hours at $18 per hour. d. Overhead is applied on the basis of direct labor cost. e. Actual overhead was $4,415. f. Job 115 was completed and transferred to the finished goods warehouse. g. (1) Job 115 was shipped, and (2) the customer was billed for 125 percent of the cost.arrow_forward
- What is the total amount of manufacturing overhead applied to production during the year? (Show complete calculations) What is the total manufacturing cost added to Work in Process during the year? What is the journal entry to record the transfer of completed jobs that is referred to above?arrow_forwardPrepare the statement of cost of goods manufactured and statement of cost of goods sold.arrow_forwardSurfsUp Specialty Products has the following inventory account balances and related manufacturing cost flow information for the month of October: Raw Materials, October 1 $ 20,000 Raw Materials, October 31 $ 25,000 Work in Process, October 1 $ 45,000 Work in Process, October 31 $ 40,000 Finished Goods, October 1 $ 68,000 Finished Goods, October 31 $ 62,000 Raw materials purchased ? Raw materials used $ 75,000 Direct labor incurred ? Manufacturing overhead incurred $ 120,000 Cost of goods manufactured $ 300,000 Cost of goods sold ? Direct labor incurred in October is:arrow_forward
- AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
- Horngren's Cost Accounting: A Managerial Emphasis...AccountingISBN:9780134475585Author:Srikant M. Datar, Madhav V. RajanPublisher:PEARSONIntermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill EducationFinancial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education