Question

Ravsten Company uses a job-order costing system. On January 1, the beginning of the current year, the company’s inventory balances were as follows:

Raw materials	$	25,000
Work in process	$	13,600
Finished goods	$	31,800

The company applies overhead cost to jobs on the basis of machine-hours. For the current year, the company estimated that it would work 37,800 machine-hours and incur $166,320 in manufacturing overhead cost. The following transactions were recorded for the year:

1. Raw materials were purchased on account: $236,000.
2. Raw materials were requisitioned for use in production: $208,000 (85% direct and 15% indirect).
3. The following costs were incurred for employee services:

Direct labour	$	174,400
Indirect labour	$	30,600
Sales commissions	$	41,400
Administrative salaries	$	87,200

4. Heat, power, and water costs were incurred in the factory: $50,100.
5. Prepaid insurance expired during the year: $19,000 (80% relates to factory operations, and 20% relates to selling and administrative activities).
6. Advertising costs were incurred, $59,000.
7. Depreciation was recorded for the year: $70,800 (75% relates to factory operations, and 25% relates to selling and administrative activities).
8. Manufacturing overhead cost was applied to production. The company recorded 43,600 machine-hours for the year.
9. Goods that cost $539,200 to manufacture according to their job cost sheets were transferred to the finished goods warehouse.
10. Sales for the year totalled $783,700 and were all on account. The total cost to manufacture these goods according to their job cost sheets was $530,600.

3-b. Prepare a journal entry to properly dispose of any balance in the Manufacturing Overhead account. (Do not round intermediate calculations and round your final answers to 2 decimal places. If no entry is required for a transaction/event, select "No journal entry required in the first account fleld.) View transaction list Journal entry worksheet Record the entry to properly dispose of any balance in the Manufacturing Overhead account. Note: Enter debits before credits. Event General Journal Debit Credit Record entry Clear entry View general journal

Answer 1

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Ravsten Company
Calculation of overhead application rate	Amount $	Note
Estimated manufacturing overhead cost	166,320.00	A
Estimated machine-hours	37,800.00	B
Overhead application rate	4.40	C=A/B
Calculation of overhead applied for the year	Amount $	Note
Actual machine-hours	43,600.00	D
Overhead application rate	4.40	See C
Overhead applied	191,840.00	E=C*D
Calculation of actual overhead cost incurred for the year	Amount $
Indirect materials (15% of $ 208,000)	31,200.00	Note
Indirect labor	30,600.00
Heat, power, and water costs	50,100.00
Insurance expired (80% of $ 19,000)	15,200.00
Depreciation (75% of $ 70,800)	53,100.00
Actual overhead cost incurred	180,200.00	F
Calculation of over/under applied overhead		Note
Overhead applied	191,840.00	See E
Less: Actual overhead cost incurred	180,200.00	See F
Over applied overhead	11,640.00
Answer 3-b
As nothing is mentioned so I am assuming that Over applied overhead will be closed through cost of goods sold account.
Event	General Journal	Debit $	Credit $
1.	Manufacturing Overhead cost	11,640.00
	Cost of goods sold		11,640.00