1)
Event | Account titles and explanation | Debit | Credit |
a. | Raw Materials Inventory | $255000 | |
Accounts Payable | $255000 | ||
(To record materials purchased) | |||
b. | Work in Process Inventory | $240000 | |
Raw Materials Inventory | $240000 | ||
(To record direct materials used in production) | |||
c. | Manufacturing Overhead ($70000*95%) | $66500 | |
Utilities Expense ($70000*5%) | $3500 | ||
Accounts Payable | $70000 | ||
(To record utilities bills incurred on account) | |||
d. | Work in Process Inventory | $285000 | |
Manufacturing Overhead | $101000 | ||
Salaries Expense | $165000 | ||
Salaries and Wages Payable ($285000+101000+165000) | $551000 | ||
(To record salary and wages incurred) | |||
e. | Manufacturing Overhead | $65000 | |
Accounts Payable | $65000 | ||
(To record maintenance costs incurred on account) | |||
f. | Advertising Expense | $147000 | |
Accounts Payable | $147000 | ||
(To record advertising costs incurred on account) | |||
g. | Manufacturing Overhead ($83000*80%) | $66400 | |
Depreciation Expense ($83000*20%) | $16600 | ||
Accumulated Depreciation : Equipment | $83000 | ||
(To record depreciation expense) | |||
h. | Manufacturing Overhead ($108000*85%) | $91800 | |
Rent Expense ($108000*15%) | $16200 | ||
Accounts Payable | $108000 | ||
(To record rent incurred on account) | |||
i. | Work in Process Inventory ($370*1085) | $401450 | |
Manufacturing Overhead | $401450 | ||
(To record manufacturing overhead applied) | |||
j. | Finished Goods Inventory | $880000 | |
Work in Process Inventory | $880000 | ||
(To record work in process transferred to finished goods) | |||
k. | Accounts Receivable | $1750000 | |
Sales | $1750000 | ||
(To record sales on account) | |||
Cost of Goods Sold | $910000 | ||
Finished Goods Inventory | $910000 | ||
(To record cost of goods sold) |
Predetermined overhead rate= Estimated manufacturing overhead/Estimated direct labor hours
= $373700/1010= $370 per direct labor hour
Raw materials inventory | Work in process inventory | |||||||
Beg. bal. | $41000 | 240000 | (b) | Beg. bal. | $32000 | 880000 | (j) | |
(a) | 255000 | (b) | 240000 | |||||
(d) | 285000 | |||||||
End. bal. | $56000 | (i) | 401450 | |||||
Finished goods inventory | End. bal. | $78450 | ||||||
Beg. bal. | $71000 | 910000 | (k) | |||||
(j) | 880000 | Manufacturing overhead | ||||||
(c) | 66500 | 401450 | (i) | |||||
End. bal. | $41000 | (d) | 101000 | |||||
(e) | 65000 | |||||||
Accounts payable | (g) | 66400 | ||||||
$255000 | (a) | (h) | 91800 | |||||
70000 | (c) | |||||||
65000 | (e) | End. bal. | 10750 | |||||
147000 | (f) | |||||||
108000 | (h) | Utilities expense | ||||||
(c) | 3500 | |||||||
End. bal. | $645000 | |||||||
End. bal. | 3500 | |||||||
Salaries expense | ||||||||
(d) | 165000 | Salaries and wages payable | ||||||
551000 | (d) | |||||||
End. bal. | 165000 | |||||||
End. bal. | 551000 | |||||||
Advertising expense | ||||||||
(f) | 147000 | Depreciation expense | ||||||
(g) | 16600 | |||||||
End. bal. | 147000 | |||||||
End. bal. | 16600 | |||||||
Accumulated depreciation- Equipment | ||||||||
83000 | (g) | Rent expense | ||||||
(h) | 16200 | |||||||
End. bal. | 83000 | |||||||
End. bal. | 16200 | |||||||
Accounts receivable | ||||||||
(k) | 1750000 | Sales | ||||||
1750000 | (k) | |||||||
End. bal. | 1750000 | |||||||
End. bal. | 1750000 | |||||||
Cost of goods sold | ||||||||
(k) | 910000 | |||||||
End. bal. | 910000 |
3.
Froya Fabrikker | ||
Schedule of Cost of Goods Manufactured | ||
Direct materials: | ||
Beginning raw materials inventory | $41000 | |
Add: Purchase of raw materials | 255000 | |
Total raw materials available for use | 296000 | |
Less: Ending raw materials inventory | -56000 | |
Direct materials used in production | $240000 | |
Direct labor | 285000 | |
Manufacturing overhead applied | 401450 | |
Total manufacturing costs | 926450 | |
Add: Beginning work in process inventory | 32000 | |
Total cost of work in process | 958450 | |
Less: Ending work in process inventory | -78450 | |
Cost of goods manufactured | $880000 |
4-A) Actual manufacturing cost= $66500+101000+65000+66400+91800= $390700
Overapplied or underapplied overhead= Actual manufacturing cost-Applied manufacturing costs
= $390700-401450= $10750 overapplied
Event | Account titles and explanation | Debit | Credit |
Manufacturing overhead | $10750 | ||
Cost of goods sold | $10750 | ||
(To record overapplied manufacturing overhead close to cost of goods sold) |
b)
Froya Fabrikker | ||
Schedule of Cost of goods sold | ||
Beginning finished goods inventory | $71000 | |
Add: Cost of goods manufactured | 880000 | |
Cost of goods available for sale | 951000 | |
Less: Ending finished goods inventory | -41000 | |
Unadjusted cost of goods sold | 910000 | |
Less: Overapplied overhead | -10750 | |
Adjusted cost of goods sold | 899250 |
5)
Froya Fabrikker | ||
Sales | $1750000 | |
Less: Cost of goods sold | -899250 | |
Gross profit | 850750 | |
Less: Selling and administrative expenses | ||
Utilities expense | $3500 | |
Salaries expense | 165000 | |
Advertising expense | 147000 | |
Depreciation expense | 16600 | |
Rent expense | 16200 | |
Total selling and administrative expenses | -348300 | |
Net operating income | $502450 |
HW Chpt 2&3 Help Froya Fabrikker A/S of Bergen, Norway, is a small company that manufactures...
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 $329,000 of manufacturing overhead for an estimated allocation base of 940 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 $382,500 of manufacturing overhead for an estimated allocation base of 850 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 $350,000 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 $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- ed 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: points a. Raw materials purchased on...
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: 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...
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 $372,000 of manufacturing overhead for an estimated allocation base of 1,200 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 $372,000 of manufacturing overhead for an estimated allocation base of 1,200 direct labor-hours. The following transactions took place during the year: Raw materials purchased on account,...