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FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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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 $378,000 of manufacturing overhead for an estimated allocation base of 900 direct
labor-hours. The following transactions occurred during the year:
a. Raw materials purchased on account, $285,000.
b. Raw materials used in production (all direct materials), $270,000.
c. Utility bills incurred on account, $76,000 (85% related to factory operations, and the remainder related to selling and administrative
activities).
d. Accrued salary and wage costs:
Direct labor (950 hours)
Indirect labor
Selling and administrative salaries.
e. Maintenance costs incurred on account in the factory, $71,000
f. Advertising costs incurred on account, $153,000.
g. Depreciation recorded for the year, $89,000 (70% related to factory equipment, and the remainder related to selling and
administrative equipment).
$ 315,000
$ 107,000
$ 195,000
h. Rental cost incurred on account, $114,000 (75% related to factory facilities, and the remainder related to selling and administrative
facilities).
i. Manufacturing overhead cost applied to jobs, $?.
j. Cost of goods manufactured, $940,000.
k. Sales for the year (all on account) totaled $2,050,000. These goods cost $970,000 according to their job cost sheets.
The beginning balances in the inventory accounts were:
Raw Materials.
Work in Process
Finished Goods
$ 47,000
$ 38,000
$ 77,000
Required:
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.](https://content.bartleby.com/qna-images/question/1c36d334-d677-4a5a-b7b0-2a7b69cecd25/502a048e-3a6d-47ef-a62c-1fda4bcdf720/c7n3ca5_thumbnail.png)
Transcribed Image Text: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 $378,000 of manufacturing overhead for an estimated allocation base of 900 direct
labor-hours. The following transactions occurred during the year:
a. Raw materials purchased on account, $285,000.
b. Raw materials used in production (all direct materials), $270,000.
c. Utility bills incurred on account, $76,000 (85% related to factory operations, and the remainder related to selling and administrative
activities).
d. Accrued salary and wage costs:
Direct labor (950 hours)
Indirect labor
Selling and administrative salaries.
e. Maintenance costs incurred on account in the factory, $71,000
f. Advertising costs incurred on account, $153,000.
g. Depreciation recorded for the year, $89,000 (70% related to factory equipment, and the remainder related to selling and
administrative equipment).
$ 315,000
$ 107,000
$ 195,000
h. Rental cost incurred on account, $114,000 (75% related to factory facilities, and the remainder related to selling and administrative
facilities).
i. Manufacturing overhead cost applied to jobs, $?.
j. Cost of goods manufactured, $940,000.
k. Sales for the year (all on account) totaled $2,050,000. These goods cost $970,000 according to their job cost sheets.
The beginning balances in the inventory accounts were:
Raw Materials.
Work in Process
Finished Goods
$ 47,000
$ 38,000
$ 77,000
Required:
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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