Bartlett Corporation, which began operations on January 1 of the current year, reported the following information:Estimated manufacturing overhead$600,000Actual manufacturing overhead639,000Estimated direct labor cost480,000Actual direct labor cost 500,000Total debits in the Work-in-Process account1,880,000Total credits in the Finished-Goods account920,000Bartlett uses a normal cost system and applies manufacturing overhead to jobs on the basis of direct labor cost. A 60% markup is added to the cost of completed production when finished goods are sold. On December 31, job no. 18 was the only job that remained in production. That job had direct-material and direct-labor charges of $16,500 and $36,000, respectively.Required: A. Determine the company's predetermined overhead rate.B.

Question

Determine the amount of under- or overapplied overhead. Be sure to label your answer.C. Compute the amount of direct materials used in production.D. Calculate the balance the company would report as ending work-in-process inventory.E. Prepare the journal entry(ies) needed to record Bartlett's sales, which are all made on account.

What will be an ideal response?

Answer 1

A. Predetermined overhead rate: $600,000 ÷ $480,000 = 125% of direct labor cost
B. Actual manufacturing overhead ($639,000) - applied overhead ($500,000 × 125% = $625,000) = $14,000 underapplied
C. Total debits to Work-in-Process ($1,880,000) - direct labor ($500,000) - applied overhead ($625,000) = direct materials used ($755,000) 
D. The only job in production is job no. 18, which has direct material of $16,500 and direct labor of $36,000. Applied overhead amounts to $45,000 ($36,000 × 125%), yielding a total job cost of $97,500 ($16,500 + $36,000 + $45,000).
E. The company's cost of goods sold equals $920,000, resulting in sales revenues of $1,472,000 ($920,000 s 160%). Thus: