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Birmingham Bowling Ball Company (BBBC) uses a job-order costing system to accumulate manufactur-… 1 answer below » Birmingham Bowling Ball Company (BBBC) uses a job-order costing system to accumulate manufactur- ing costs. The company’s work-in-process on December 31, 20×3, consisted of one job (no. 3088), which was carried on the year-end balance sheet at $78,400. There was no finished-goods inventory on this date. BBBC applies manufacturing overhead to production on the basis of direct-labor cost. (The bud- geted direct-labor cost is the company’s practical capacity, in terms of direct-labor hours, multiplied by the budgeted direct-labor rate.) Budgeted totals for 20×4 for direct labor and manufacturing overhead Direct material used ………………………………………………………………………………………………………….. $2,800,000 Direct labor …………………………………………………………………………………………………………………….. 2,175,000 Indirect material used ……………………………………………………………………………………………………….. 32,500 Indirect labor …………………………………………………………………………………………………………………… 1,430,000 Factory depreciation …………………………………………………………………………………………………………. 870,000 Factory insurance …………………………………………………………………………………………………………….. 29,500 Factory utilities ………………………………………………………………………………………………………………… 415,000 Selling and administrative expenses ……………………………………………………………………………………… 1,080,000 Total ………………………………………………………………………………………………………………………….. $8,832,000 are $2,100,000 and $2,730,000, respectively. Actual results for the year follow. Job no. 3088 was completed in January 20×4; there was no work in process at year-end. All jobs pro- duced during 20×4 were sold with the exception of job no. 3154, which contained direct-material costs of $78,000 and direct-labor charges of $42,500. BBBC charges any under- or overapplied overhead to Cost of Goods Sold. Required: 1. Determine the company’s predetermined overhead application rate. 2. Determine the additions to the Work-in-Process Inventory account for direct material used, direct labor, and manufacturing overhead. 3. Compute the amount BBBC would disclose as finished-goods inventory on the December 31, 20×4, balance sheet. 4. Prepare the journal entry needed to record the year’s completed production. 5. Compute the amount of under- or overapplied overhead at year-end, and prepare the necessary journal entry to record its disposition. 6. Determine BBBC’s 20×4 cost of goods sold. 7. Would it be appropriate to include selling and administrative expenses in either manufacturing overhead or cost of goods sold? Briefly explain. Dec 04 2015 02:32 PM
