Birmingham Bowling Ball Company (BBBC) uses a job-order costing system to accumu
ID: 2342299 • Letter: B
Question
Birmingham Bowling Ball Company (BBBC) uses a job-order costing system to accumulate manufacturing costs. The company’s work-in-process on December 31, 20x3, consisted of one job (no. 3088), which was carried on the year-end balance sheet at $156,800. There was no finished-goods inventory on this date.
BBBC applies manufacturing overhead to production on the basis of direct-labor cost. (The budgeted direct-labor cost is the company’s practical capacity, in terms of direct-labor hours, multiplied by the budgeted direct-labor rate.) Budgeted totals for 20x4 for direct labor and manufacturing overhead are $4,200,000 and $5,460,000 respectively. Actual results for the year follow.
Job no. 3088 was completed in January 20x4; there was no work in process at year-end. All jobs produced during 20x4 were sold with the exception of job no. 3154, which contained direct-material costs of $155,000 and direct-labor charges of $85,000. BBBC charges any under- or overapplied overhead to Cost of Goods Sold.
Prepare the journal entry needed to record the year’s completed production. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
Compute the amount of under- or overapplied overhead at year-end.
Prepare the necessary journal entry to record its disposition. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
Determine BBBC’s 20x4 cost of goods sold.
Birmingham Bowling Ball Company (BBBC) uses a job-order costing system to accumulate manufacturing costs. The company’s work-in-process on December 31, 20x3, consisted of one job (no. 3088), which was carried on the year-end balance sheet at $156,800. There was no finished-goods inventory on this date.
BBBC applies manufacturing overhead to production on the basis of direct-labor cost. (The budgeted direct-labor cost is the company’s practical capacity, in terms of direct-labor hours, multiplied by the budgeted direct-labor rate.) Budgeted totals for 20x4 for direct labor and manufacturing overhead are $4,200,000 and $5,460,000 respectively. Actual results for the year follow.
Explanation / Answer
Solution 4:
Predetermined overhead rate = Budgeted overhead /Budgeted direct labor cost = $5,460,000 / $4,200,000 = 130% of direct labor cost
Solution 5a:
Actual overhead incurred = Indirect material +Indirect labor + Factory depreciation + Factory insurance + Factory utilities
= $63,000 + $2,860,000 + $1,740,000 + $59,000 + $832,000
= $5,554,000
Manufacturing overhead applied = $5,655,000
Overapplied overhead = $5,655,000 - $5,554,000 = $101,000
Schedule of cost of completed production - Birmingham Bowling Ball Company Particulars Amount Direct materials $5,500,000.00 Direct labor $4,350,000.00 Manufacturing overhead Applied (130% of DL Cost) $5,655,000.00 Manufacturing cost incurred during period $15,505,000.00 Add: Beginning WIP $156,800.00 Less: Ending WIP $0.00 Cost of goods manufactured $15,661,800.00Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.