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Bunnell Corporation is a manufacturer that uses job-order costing. On January 1, the companys inventory balances were as follows: Raw materials $ 48,000 Work in

Bunnell Corporation is a manufacturer that uses job-order costing. On January 1, the companys inventory balances were as follows:

Raw materials $ 48,000
Work in process $ 19,400
Finished goods $ 56,100

The company applies overhead cost to jobs on the basis of direct labor-hours. For the current year, the companys predetermined overhead rate of $14.75 per direct labor-hour was based on a cost formula that estimated $590,000 of total manufacturing overhead for an estimated activity level of 40,000 direct labor-hours. The following transactions were recorded for the year:

  1. Raw materials were purchased on account, $590,000.
  2. Raw materials used in production, $546,400. All of of the raw materials were used as direct materials.
  3. The following costs were accrued for employee services: direct labor, $540,000; indirect labor, $150,000; selling and administrative salaries, $250,000.
  4. Incurred various selling and administrative expenses (e.g., advertising, sales travel costs, and finished goods warehousing), $394,000.
  5. Incurred various manufacturing overhead costs (e.g., depreciation, insurance, and utilities), $440,000.
  6. Manufacturing overhead cost was applied to production. The company actually worked 41,000 direct labor-hours on all jobs during the year.
  7. Jobs costing $1,610,950 to manufacture according to their job cost sheets were completed during the year.
  8. Jobs were sold on account to customers during the year for a total of $3,082,500. The jobs cost $1,620,950 to manufacture according to their job cost sheets.

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