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, $275,000. b. Raw materials used in production (all direct materials), $260,000. c. Utility bills incurred on account, $74,000 (95% related to factory operations, and the remainder related to selling and administrative activities) d. Accrued salary and wage costs: C Direct labor (1,100 hours) 305,000 $ 105,000 $ 185,000 Indirect labor Selling and administrative salaries e. Maintenance costs incurred on account in the factory, $69,000 f. Advertising costs incurred on account, $151,00o. g. Depreciation was recorded for the year, $87,000 (80% related to factory equipment, and the remainder related to selling and administrative equipment) h. Rental cost incurred on account, $112,000 (85% related to factory facilities, and the remainder related to selling and administrative facilities) i. Manufacturing overhead cost was applied to jobs, $ ? j.Cost of goods manufactured for the year, $920,000 k. Sales for the year (all on account) totaled $1,950,000. These goods cost $950,000 according to their job cost sheets 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 Complete this question by entering your answers in the tabs below Req 1 Req 2 Req 4B Req 5 Req 3 Req 4A Post your entries to T-accounts. (Don't forget to enter the beginning inventory balances above.) Sales Accounts Receivable Beg. Bal. Beg. Bal. End. Bal End, Bal. Raw Materials Cost of Goods Sold Beg. Bal, Beg. Bal. End. Bal. End. Bal. Work in Process Manufacturing Overhead Beg. Bal. Beg. Bal End. Bal. End. Bal. Finished Goods Advertising Expense Beg. Bal. Beg. Bal. End. Bal. End. Bal, Accumulated Depreciation Utilities Expense Beg. Bal, Beg. Bal, End. Bal. End, Bal. Accounts Payable Salaries Expense Beg. Bal. Beg. Bal. End, Bal End, Bal. Salaries & Wages Payable Depreciation Expense Beg. Bal Beg. Bal. End. Bal End, Bal, Rent Expense Beg. Bal, End. Bal,

Answer 1

Part 1: Sr No Account title Raw Materials Accounts Payable Sr No Account title h. Debit Credit 95.200 Debit Credit Manufacturing Overhead 112000 0.85 Rent Expense Accounts Payable 275.000 a. 275,000 16,800 112,000 260,000 Work in Process Raw Materials b Work in Process 1100*380 Manufacturing Overhead i** 418,000 260,000 418,000 Manufacturing Overhead (74000*0.95) Utilities Exnene Accounts Payable 70,300 3,700 74,000 Finished Goods Work in Process 920.000 920,000 Work in Process Manufacturing Overhead Salaries Expense Salaries and Wages Payable Accounts Receivable k. d 305,000 105,000 1,950,000 Sales 1,950,000 185.000 Cost of Goods Sold Finished Goods 595,000 950,000 950,000 Manufacturing Overhead Accounts Payable 69,000 69,000 f Predetermined overhead rate -estimated overhead/estimated direct labor hours 380000/1000 Advertising Expense Accounts Payable 380 Per DLH 151,000 151,000 Manufacturing Overhead 87000*0.80 69,600 17,400 Accumulated Depreciation 87,000 Sheet201 Sheet202 Sheet203 Sheet204 Sheet205 Sheet206 Sheet207 Sheet208 Sheet209 ENG 18:05 ll T UK 13/06/2019 THELI

Part 2 Accounts Receivable 1,950,000 Sales Accounts Payable (a (c (e (f (k) 1,950,000 275,000 (k) 74,000 69,000 151,000 112,000 Cost of Goods Sold 950,000 Raw Materials 42,000 (b) 275,000 57.000 (k) 260,000 Bai (a (h. Ba Salaries & Wages Pavable (d) Work in Process Manufacturing Overhead 70,300 (0) 105,000 595,000 36,000 (i (c) (d) (e) Bal. 920,000 418,000 (b (d 260,000 Depreciation Expense 17,400 305,000 69,000 69,600 (q. 418,000 99,000 |(9) (h) Bal. 95,200 Ra 8,900 Rent Expense 16.800 (h) Advertising Expense 151,000 Finished Goods 75,000 (k) (f) Bal 950.000 920,000 45,000 Ba Accumulated Depreciation (g) Utilities Expense 87,000 (c) 3.700 Salaries Expense 185.000 (d) Sheet205 Sheet208 Sheet209 Sheet204 Sheet206 Sheet207 Sheet201 Sheet202 Sheet203 ENG Tos02 13/06/2019

4B.Schedule of cost of goods sold: Finished goods inventory, beginning Add: Cost of goods manufactured Goods available for sale |Deduct finished goods invento FroyaFabrikker A/S 5.Income Statement Sales Cost of goods sold Gross margin FroyaFabrikker A/S 3.Schedule of Cost of Goods Manufactured 75,000 920.000 Direct materials: Raw materials inventory, beginning Purchases of raw matenials 1,950,000 941,100 1,008,900 42,000 275,000 995,000 ending M- 950.000 8.900 941,100 e for us ending g Acb duministrative expenses: Deduct: Overanplied overhead Adjusted cost of goods sold Raw materials inver Materials used in production _ 151,000 3,700 185,000 17,400 16,800 373,900 635,000 57,000 nse Utlities expense Salaries expense Depreciation expense Rent expense Net operating income 260,000 305,000 418,000 983,000 36,000 1,019,000 99,000 920,000 Direct labor Manufacturing overhead applied to work Total manufacturing costs Add: Work process process, beginning Deduct: Work process, ending Cost of goods manufactured Part 4A: Account title Debit Credit Manufacturing Overhead Cost of Goods Sold 8,900 8,900 4 H Sheet202 Sheet205 Sheet207 Sheet201 Sheet203 Sheet204 Sheet206 Sheet208 Sheet209 ENG 18:06 13/06/2019