Bunnell Corporation is a manufacturer that uses job-order costing. On January 1,

Question

Bunnell Corporation is a manufacturer that uses job-order costing. On January 1, the company's inventory balances were as follows: Raw materials Work in process 22,200 Finished goods2,500 63,000 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 $11.50 per direct labor-hour was based on a cost formula that estimated $460,000 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, $618,000. b. Raw materials use in production, $569,400. All of of the raw materials were used as direct materials. c. The following costs were accrued for employee services: direct labor, $410,000; indirect labor, $150,000; selling and administrative salaries, $338,000. d. Incurred various selling and administrative expenses (e.g., advertising, sales travel costs, and finished goods warehousing), $382,000. e. Incurred various manufacturing overhead costs (e.g., depreciation, insurance, and utilities), $310,000. 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 $1,372,600 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 $3,202,50o. The jobs cost $1,382,600 to manufacture according to their job cost sheets.

Explanation / Answer

Manufactruing overhead applied 471500 (41000*11.5) Manufacturing overhead Incurred 460000 (150000+310000) Overhead overapplied 11500 Manufacturing overhead is overapplied by $11,500.

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