Required information [The following information applies to the questions display

Question

Required information [The following information applies to the questions displayed below.] 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 goods57,600 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. 5. What is the total manufacturing cost added to Work in Process during the year? Total manufacturing cost $ 400,000

Explanation / Answer

Part a:

Particulars        

Amount ($)

Raw materials used in production

591800

Direct labour

400000

Indirect labour

150000

Manufacturing overhead costs

300000

Manufacturing overheads

450000

Total manufacturing cost added to work in progress

1891800

Part b:

Date

General journal

Debit ($)

Credit ($)

Work in progress inventory

591800

Raw materials inventory

591800

(Being direct materials used)

Manufacturing overhead

300000

Accumulated depreciation

300000

(Being insurance, depreciation and utilities used)

Work in progress inventory

400000

Factory payroll

400000

(Being direct labour used)

Manufacturing overhead

150000

Factory payroll

150000

(Being indirect labour used)

Work in progress inventory

450000

Manufacturing overhead

450000

(Being overhead applied to production)

Finished goods inventory

1441800

Work in progress inventory

1441800

(Being job completed)

Cost of job

1441800

Finished goods inventory

1441800

(Being cost job recorded and completed)

Part a:

Particulars        

Amount ($)

Raw materials used in production

591800

Direct labour

400000

Indirect labour

150000

Manufacturing overhead costs

300000

Manufacturing overheads

450000

Total manufacturing cost added to work in progress

1891800

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