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 Finished goods 38,100 50,500 process 25,000 The company applies overhead cost to jobs on the basis of direct labor-hours. For the current year, the companys predetermined overhead rate of $11.75 per direct labor-hour was based on a cost formula that estimated $470,000 of total manufacturing overhead for an estimated activity level of 40,000 direct labor-hours. The following transaction:s were recorded for the year: a. Raw materials were purchased on account, $592,000 b. Raw materials use in production, $557,000. All of of the raw materials were used as direct materials c. The following costs were accrued for employee services: direct labor, $420,000; indirect labor, $150,000; selling and administrative salaries, $295,000 d. Incurred various selling and administrative expenses (e.g., advertising, sales travel costs, and finished goods warehousing), $381,000 e. Incurred various manufacturing overhead costs (e.g., depreciation, insurance, and utilities), $320,000 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 $1,399,450 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 $2,925,000. The jobs cost $1,409,450 to manufacture according to their job cost sheets. 2. What is the ending balance in Raw Materials? Raw Materials Beg. Bal 50,500 592,000 557,000 End. Bal 85,500

Explanation / Answer

Solution 2:

Ending balance of raw material inventory = $85,500

Solution 4:

Manufacturing overhead applied to production = Actual direct labor hours * Pre determined overhead rate

= 41000 * $11.75 = $481,750

Solution 5:

Total manufacturing cost added to WIP = Direct material + Direct labor + Manufacturing overhead applied

= $557,000 + $420,000 + $481,750 = $1,458,750

Solution 7:

Ending WIP balance = $84,300

Raw Material Inventory Particulars Debit Particulars Credit To beginning balance $50,500.00 By Work In Process $557,000.00 To Accounts Payable $592,000.00 By Ending balance $85,500.00 Total $642,500.00 Total $642,500.00

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