Question

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 on account, $220,000 b. Raw materials used in production (all direct materials), $205,000. c Utility bills incurred on account, $63,000 (90% related to factory operations, and the remainder related to selling and administrative activities) d. Accrued salary and wage costs: Direct labor (1,075 hours) Indirect labor Selling and administrative salaries $250,800 $94,800 $130,000 e. Maintenance costs incurred on account in the factory, $58,000 f. Advertising costs incurred on account, $140,000 g. Depreciation was recorded for the year, $88,000 (85% related to factory equipment, and the remainder related to selling and administrative equipment) h. Rental cost incurred on acc facilities) L. Manufacturing overhead cost was applied to jobs, $2 J Cost of goods manufactured for the year, k. Sales for the year (all on account) totaled $1.400,000 These goods cost $840000 according to their job cost sheets ount, $113,000 (90% related to factory facilities, and the remainder related to selling and administrative Soles o theyea llnat ttd $140000 These gods cot s84o000 acording to ther job cost sheets The balances in the inventory accounts at the beginning of the year were $34,000 Raw Materials Work in Process $25,000 Finished Goods i$64,00o Required: Prev4 of 4 Next Raw Materials Work in Process$25,000 Finished Goods $64,00 $34,000 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 for the year. Complete this question by entering your answers in the tabs below Req 1 Req 2 Req 3 Req 4A Req 4B Req 5 Prepare journal entries to record the preceding transactions. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list View journal entry worksheet Raw materials 220.000 Accounts payable 220,000 b. Work in process 205,000 Raw materials 205,000 d. Work in process Manufacturing overheacd Salaries expense 94,000 Work in process Manufacturing overhead 94,000 Salaries expense Salaries and wages payable 58,000 Manufacturing overhead 58,000 Accounts payable 140,000 Advertising expense 140,000 Accounts payable 74,800 Manufacturing overhead 13,200 Depreciation expense 88,000 Accumulated depreciation 101,700 Manufacturing overhead h. 11,300 Rent expense 113,000 Accounts payable Work in process Manufacturing overhead 810,000 Finished goods 810,000 Work in process 1,400,000 11Accorunits recetvable 1,400,000 Sales 840.000 (2)Cost of goods sold Finished goods 840,000 Req 2 >

Answer 1

1)predetermined overhead rate=estimated overhead /estimated DLH

380000/1000

$380per DLH

Overhead applied =actual DLH*rate

1075*380

  

Date	Account title	debit	credit
C	manufacturing overhead(63000*.90)	56700
	Utilities expense	6300
	Accounts payable		63000
D	work in process	250000
	Manufacturing overhead	94000
	Salaries and wage expense	130000
	Salaries and wage payable		474000
I	work in process	408500
	Manufacturing overhead		408500