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 $357,000 of manufacturing overhead for an estimated allocation base of 1,020 direct labor-hours. The following transactions occurred during the year: a. Raw materials purchased on account, $260,000. b. Raw materials used in production (all direct materials), $245,000. c. Utility bills incurred on account, $71,000 (80% related to factory operations, and the remainder related to selling and administrative activities). d. Accrued salary and wage costs: Direct labor (1,095 hours) $ 290,000 Indirect labor $ 102,000 Selling and administrative salaries $ 170,000 e. Maintenance costs incurred on account in the factory, $66,000 f. Advertising costs incurred on account, $148,000. g. Depreciation recorded for the year, $84,000 (75% related to factory equipment, and the remainder related to selling and administrative equipment). h. Rental cost incurred on account, $109,000 (80% related to factory facilities, and the remainder related to selling and administrative facilities). 1. Manufacturing overhead cost applied to jobs, $ ___?__ J. Cost of goods manufactured, $890,000. k. Sales for the year (all on account) totaled $1,800,000. These goods cost $920,000 according to their job cost sheets. The beginning balances in the inventory accounts were: Raw Materials Work in Process Finished Goods Required: $ 42,000 $ 33,000 $ 72,000 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 $357,000 of manufacturing overhead for an estimated allocation base of 1,020 direct labor-hours. The following transactions occurred during the year: a. Raw materials purchased on account, $260,000. b. Raw materials used in production (all direct materials), $245,000. c. Utility bills incurred on account, $71,000 (80% related to factory operations, and the remainder related to selling and administrative activities). d. Accrued salary and wage costs: Direct labor (1,095 hours) $ 290,000 Indirect labor $ 102,000 Selling and administrative salaries $ 170,000 e. Maintenance costs incurred on account in the factory, $66,000 f. Advertising costs incurred on account, $148,000. g. Depreciation recorded for the year, $84,000 (75% related to factory equipment, and the remainder related to selling and administrative equipment). h. Rental cost incurred on account, $109,000 (80% related to factory facilities, and the remainder related to selling and administrative facilities). 1. Manufacturing overhead cost applied to jobs, $ ___?__ J. Cost of goods manufactured, $890,000. k. Sales for the year (all on account) totaled $1,800,000. These goods cost $920,000 according to their job cost sheets. The beginning balances in the inventory accounts were: Raw Materials Work in Process Finished Goods Required: $ 42,000 $ 33,000 $ 72,000 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.