Froya Fabrikker A/S of Bergen, Norway, manufactures specialty heavy equipment for use in North Sea oil...
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Froya Fabrikker A/S of Bergen, Norway, manufactures specialty heavy equipment for use in North Sea oil fields. The company uses a job-order costing system that applies manufacturing overhead cost to jobs based on direct labor-hours. Its predetermined overhead rate was based on a cost formula that estimated $342,000 of manufacturing overhead for an estimated allocation base of 950 direct labor-hours. The following transactions occurred during the year: a. Raw materials purchased on account, $210,000. b. Raw materials used in production (all direct materials), $195,000. c. Utility bills incurred on account, $61,000 (95% related to factory operations, and the remainder related to selling and administrative activities). d. Accrued salary and wage costs: Direct labor (1,025 hours) Indirect labor Selling and administrative salaries e. Maintenance costs incurred on account in the factory, $56,000 f. Advertising costs incurred on account, $138,000. g. Depreciation recorded for the year, $86,000 (75% related to factory equipment, and the remainder related to selling and administrative equipment). h. Rental cost incurred on account, $111,000 (80% related to factory facilities, and the remainder related to selling and administrative facilities). $ 240,000 $ 92,000 $ 120,000 L Manufacturing overhead cost applied to jobs, $? Cost of goods manufactured, $790,000. k Sales for the year (all on account) totaled $1,300,000. These goods cost $820,000 according to their job cost sheets. The beginning balances in the inventory accounts were: Raw Materials Work in Process Finished Goods $32,000 $ 23,000 $ 62,000 1. Prepare journal entries to record the preceding transactions. 2. Post your entries to T-accounts. (Don't forget to enter the beginning inventory balances above.) 3. Prepare a schedule of cost of goods manufactured. 4A. Prepare a journal entry to close any balance in the Manufacturing Overhead account to Cost of Goods Sold. 4B. Prepare a schedule of cost of goods sold. 5. Prepare an income statement. Froya Fabrikker A/S of Bergen, Norway, manufactures specialty heavy equipment for use in North Sea oil fields. The company uses a job-order costing system that applies manufacturing overhead cost to jobs based on direct labor-hours. Its predetermined overhead rate was based on a cost formula that estimated $342,000 of manufacturing overhead for an estimated allocation base of 950 direct labor-hours. The following transactions occurred during the year: a. Raw materials purchased on account, $210,000. b. Raw materials used in production (all direct materials), $195,000. c. Utility bills incurred on account, $61,000 (95% related to factory operations, and the remainder related to selling and administrative activities). d. Accrued salary and wage costs: Direct labor (1,025 hours) Indirect labor Selling and administrative salaries e. Maintenance costs incurred on account in the factory, $56,000 f. Advertising costs incurred on account, $138,000. g. Depreciation recorded for the year, $86,000 (75% related to factory equipment, and the remainder related to selling and administrative equipment). h. Rental cost incurred on account, $111,000 (80% related to factory facilities, and the remainder related to selling and administrative facilities). $ 240,000 $ 92,000 $ 120,000 L Manufacturing overhead cost applied to jobs, $? Cost of goods manufactured, $790,000. k Sales for the year (all on account) totaled $1,300,000. These goods cost $820,000 according to their job cost sheets. The beginning balances in the inventory accounts were: Raw Materials Work in Process Finished Goods $32,000 $ 23,000 $ 62,000 1. Prepare journal entries to record the preceding transactions. 2. Post your entries to T-accounts. (Don't forget to enter the beginning inventory balances above.) 3. Prepare a schedule of cost of goods manufactured. 4A. Prepare a journal entry to close any balance in the Manufacturing Overhead account to Cost of Goods Sold. 4B. Prepare a schedule of cost of goods sold. 5. Prepare an income statement.
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To address this problem well follow the steps as requested 1 Prepare journal entries for the transactions a Raw materials purchased on account Raw Mat... View the full answer
Related Book For
Managerial Accounting
ISBN: 978-1259307416
16th edition
Authors: Ray Garrison, Eric Noreen, Peter Brewer
Posted Date:
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