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 Finished goods $ 40,000 $ 18,000 $ 35,000 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 $16.25 per direct labor-hour was based on a cost formula that estimated $650,000 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, $510,000. b. Raw materials used in production, $480,000. All of the raw materials were used as direct materials. c. Direct labor was incurred by the factory, $600,000. d. Incurred various manufacturing overhead costs (e.g., depreciation, insurance, and utilities), $650,000. e. Manufacturing overhead cost was applied to production. The company actually worked 41,000 direct labor-hours on all jobs during the year. f. Jobs costing $1,680,000 to manufacture according to their job cost sheets were completed during the year. g. Jobs were sold on account to customers during the year for a total of $2,800,000. The jobs cost $1,690,000 to manufacture according to their job cost sheets. What is the gross profit for the year? Gross margin
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 Finished goods $ 40,000 $ 18,000 $ 35,000 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 $16.25 per direct labor-hour was based on a cost formula that estimated $650,000 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, $510,000. b. Raw materials used in production, $480,000. All of the raw materials were used as direct materials. c. Direct labor was incurred by the factory, $600,000. d. Incurred various manufacturing overhead costs (e.g., depreciation, insurance, and utilities), $650,000. e. Manufacturing overhead cost was applied to production. The company actually worked 41,000 direct labor-hours on all jobs during the year. f. Jobs costing $1,680,000 to manufacture according to their job cost sheets were completed during the year. g. Jobs were sold on account to customers during the year for a total of $2,800,000. The jobs cost $1,690,000 to manufacture according to their job cost sheets. What is the gross profit for the year? Gross margin
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Concept explainers
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
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Transcribed Image Text: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
Finished goods
$ 40,000
$ 18,000
$ 35,000
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 $16.25 per direct labor-hour was based on a cost formula that estimated $650,000 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, $510,000.
b. Raw materials used in production, $480,000. All of the raw materials were used as direct materials.
c. Direct labor was incurred by the factory, $600,000.
d. Incurred various manufacturing overhead costs (e.g., depreciation, insurance, and utilities), $650,000.
e. Manufacturing overhead cost was applied to production. The company actually worked 41,000 direct labor-hours on all
jobs during the year.
f. Jobs costing $1,680,000 to manufacture according to their job cost sheets were completed during the year.
g. Jobs were sold on account to customers during the year for a total of $2,800,000. The jobs cost $1,690,000 to
manufacture according to their job cost sheets.
What is the gross profit for the year?
Gross margin
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