Birmingham Bowling Ball Company (BBBC) uses a job-order costing system to accumulate manufacturing costs. The company's work-in-process on December 31, 20x3, consisted of one job (no. 3088), which was carried on the year-end balance sheet at $156,800. There was no finished-goods inventory on this date.
BBBC applies manufacturing overhead to production on the basis of direct-labor cost. (The budgeted 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 20x4 for direct labor and manufacturing overhead are $4,200,000 and $5,544,000 respectively. Actual results for the year follow.
Direct material used $5,500,000
Direct labor 4,350,000
Indirect material used 64,000
Indirect labor 2,860,000
Factory depreciation 1,740,000
Factory insurance 57,000
Factory utilities 830,000
Selling and administrative expenses 2,160,000
Total $17,561,000
Job no. 3088 was completed in January 20x4; there was no work in process at year-end. All jobs produced during 20x4 were sold with the exception of job no. 3154, which contained direct-material costs of $155,000 and direct-labor charges of $85,000. BBBC charges any under- or overapplied overhead to Cost of Goods Sold.
Determine the company's predetermined overhead application rate.
Determine the additions to the Work-in-Process Inventory account for direct material used, direct labor, and manufacturing overhead.
Compute the amount BBBC would disclose as finished-goods inventory on the December 31, 20x4, balance sheet.
Prepare the journal entry needed to record the year's completed production. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
Compute the amount of under- or overapplied overhead at year-end.
Prepare the necessary journal entry to record its disposition. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
Determine BBBC's 20x4 cost of goods sold.