Froya Fabrikker A/S of Bergen, Norway, is a small company that 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 on the basis of direct labor-hours. Its predetermined overhead rate was based on a cost formula that estimated $380,000 of manufacturing overhead for an estimated allocation base of 1,000 direct labor-hours. The following transactions took place during the year:
Direct labor (1,100 hours) | $ | 305,000 |
Indirect labor | $ | 105,000 |
Selling and administrative salaries | $ |
185,000 |
The balances in the inventory accounts at the beginning of the year were:
Raw Materials | $ | 45,000 |
Work in Process | $ | 36,000 |
Finished Goods | $ | 75,000 |
1. Journal Entries
In the books of Froya Fabrikker A/S:
Transaction / Event | General Journal | Debit | Credit |
$ | $ | ||
a. | Raw Materials Inventory | 275,000 | |
Accounts Payable | 275,000 | ||
b. | Work in Process Inventory | 260,000 | |
Raw Materials Inventory | 260,000 | ||
c. | Manufacturing Overhead | 70,300 | |
Utilities Expense | 3,700 | ||
Accounts Payable | 74,000 | ||
d. | Work in Process Inventory | 305,000 | |
Manufacturing Overhead | 105,000 | ||
Salaries Expense | 185,000 | ||
Salaries and Wages Payable | 595,000 | ||
e. | Manufacturing Overhead | 69,000 | |
Accounts Payable | 69,000 | ||
f. | Advertising Expense | 151,000 | |
Accounts Payable | 151,000 | ||
g. | Manufacturing Overhead | 69,600 | |
Depreciation Expense | 17,400 | ||
Accumulated Depreciation : Equipment | 87,000 | ||
h. | Manufacturing Overhead | 95,200 | |
Rent Expense | 16,800 | ||
Accounts Payable | 112,000 | ||
i. | Work in Process Inventory ( $ 380,000 / 1,000 x 1,100) | 418,000 | |
Manufacturing Overhead | 418,000 | ||
j. | Finished Goods Inventory | 920,000 | |
Work in Process Inventory | 920,000 | ||
k. | Accounts Receivable | 1,950,000 | |
Sales | 1,950,000 | ||
Cost of Goods Sold | 950,000 | ||
Finished Goods Inventory | 950,000 |
Required:
1. Prepare journal entries to record the preceding transactions. COMPLETED ABOVE
HELP PLEASE WITH 2 AND 3
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.
2. Post your entries to T-accounts. (Don’t forget to enter the beginning inventory balances above.)
Raw materials inventory | Work in process inventory | |||||||
Beg. bal. | $45000 | 260000 | (b) | Beg. bal. | $36000 | 920000 | (j) | |
(a) | 275000 | (b) | 260000 | |||||
(d) | 305000 | |||||||
End. bal. | $60000 | (i) | 418000 | |||||
Finished goods inventory | End. bal. | $99000 | ||||||
Beg. bal. | $75000 | 950000 | (k) | |||||
(j) | 920000 | Manufacturing overhead | ||||||
(c) | $70300 | 418000 | (i) | |||||
End. bal. | $45000 | (d) | 105000 | |||||
(e) | 69000 | |||||||
Accounts payable | (g) | 69600 | ||||||
$275000 | (a) | (h) | 95200 | |||||
74000 | (c) | |||||||
69000 | (e) | End. bal. | 8900 | |||||
151000 | (f) | |||||||
112000 | (h) | Utilities expense | ||||||
(c) | 3700 | |||||||
End. bal. | $681000 | |||||||
End. bal. | 3700 | |||||||
Salaries expense | ||||||||
(d) | 185000 | Salaries and wages payable | ||||||
595000 | (d) | |||||||
End. bal. | 185000 | |||||||
End. bal. | 595000 | |||||||
Advertising expense | ||||||||
(f) | 151000 | Depreciation expense | ||||||
(g) | 17400 | |||||||
End. bal. | 151000 | |||||||
End. bal. | 17400 | |||||||
Accumulated depreciation- Equipment | ||||||||
87000 | (g) | Rent expense | ||||||
(h) | 16800 | |||||||
End. bal. | 87000 | |||||||
End. bal. | 16800 | |||||||
Accounts receivable | ||||||||
(k) | 1950000 | Sales | ||||||
1950000 | (k) | |||||||
End. bal. | 1950000 | |||||||
End. bal. | 1950000 | |||||||
Cost of goods sold | ||||||||
(k) | 950000 | |||||||
End. bal. | 950000 |
3. Prepare a schedule of cost of goods manufactured
Froya Fabrikker | ||
Schedule of Cost of Goods Manufactured | ||
Direct materials: | ||
Beginning raw materials inventory | $45000 | |
Add: Purchase of raw materials | 275000 | |
Total raw materials available for use | 320000 | |
Less: Ending raw materials inventory | -60000 | |
Direct materials used in production | $260000 | |
Direct labor | 305000 | |
Manufacturing overhead applied | 418000 | |
Total manufacturing costs | 983000 | |
Add: Beginning work in process inventory | 36000 | |
Total cost of work in process | 1019000 | |
Less: Ending work in process inventory | -99000 | |
Cost of goods manufactured | $920000 | |
Froya Fabrikker A/S of Bergen, Norway, is a small company that manufactures specialty heavy equipment for...
Froya Fabrikker A/S of Bergen, Norway, is a small company that 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 on the basis of direct labor-hours. Its predetermined overhead rate was based on a cost formula that estimated $380,000 of manufacturing overhead for an estimated allocation base of 1,000 direct labor-hours. The following transactions took place during the year: Raw materials purchased on account,...
Froya Fabrikker A/S of Bergen, Norway, is a small company that 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 on the basis of direct labor-hours. Its predetermined overhead rate was based on a cost formula that estimated $380,000 of manufacturing overhead for an estimated allocation base of 1,000 direct labor-hours. The following transactions took place during the year: Raw materials purchased on account,...
Froya Fabrikker A/S of Bergen, Norway, is a small company that 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 on the basis of direct labor hours. Its predetermined overhead rate was based on a cost formula that estimated $380,000 of manufacturing overhead for an estimated allocation base of 1,000 direct labor-hours. The following transactions took place during the year: a. Raw materials purchased...
Froya Fabrikker A/S of Bergen, Norway, is a small company that
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 on the basis of direct
labor-hours. Its predetermined overhead rate was based on a cost
formula that estimated $395,600 of manufacturing overhead for an
estimated allocation base of 920 direct labor-hours. The following
transactions took place during the year:
Raw materials purchased on account,...
Froya Fabrikker A/S of Bergen, Norway, is a small company that 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 on the basis of 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 took place during the year: Raw materials purchased on account,...
Froya Fabrikker A/S of Bergen, Norway, is a small company that
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 on the basis of direct
labor-hours. Its predetermined overhead rate was based on a cost
formula that estimated $349,800 of manufacturing overhead for an
estimated allocation base of 1,060 direct labor-hours. The
following transactions took place during the year:
Raw materials purchased on account,...
Froya Fabrikker A/S of Bergen, Norway, is a small company that 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 on the basis of direct labor- hours. Its predetermined overhead rate was based on a cost formula that estimated $350,000 of manufacturing overhead for an estimated allocation base of 1,000 direct labor-hours. The following transactions took place during the year: a. Raw materials purchased...
Froya Fabrikker A/S of Bergen, Norway, is a small company that manufactures specialty heavy equipment for use in North Sea oil fields. The company uses a job-order costing system and applies manufacturing overhead cost to jobs on the basis of direct labor-hours. Its predetermined overhead rate was based on a cost formula that estimated $395,600 of manufacturing overhead for an estimated allocation base of 920 direct labor-hours. The following transactions took place during the year (all purchases and services were...
Froya Fabrikker A/S of Bergen, Norway, is a small company that
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 on the basis of direct
labor-hours. Its predetermined overhead rate was based on a cost
formula that estimated $349,800 of manufacturing overhead for an
estimated allocation base of 1,060 direct labor-hours. The
following transactions took place during the year:
Raw materials purchased on account,...
Froya Fabrikker A/S of Bergen, Norway, is a small company that 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 on the basis of direct labor hours. Its predetermined overhead rate was based on a cost formula that estimated $395,600 of manufacturing overhead for an estimated allocation base of 920 direct labor-hours. The following transactions took place during the year a. Raw materials purchased...