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 $399,000 of manufacturing overhead for an estimated allocation base of 1,050 direct labor-hours. The following transactions took place during the year:   Raw materials purchased on account, $280,000. Raw materials used in production (all direct materials), $265,000. Utility bills incurred on account, $75,000 (80% related to factory operations, and the remainder related to selling and administrative activities). Accrued salary and wage costs:         Direct labor (1,100 hours) $ 310,000 Indirect labor $ 106,000 Selling and administrative salaries $ 190,000     Maintenance costs incurred on account in the factory, $70,000 Advertising costs incurred on account, $152,000. Depreciation was recorded for the year, $88,000 (85% related to factory equipment, and the remainder related to selling and administrative equipment). Rental cost incurred on account, $113,000 (90% related to factory facilities, and the remainder related to selling and administrative facilities). Manufacturing overhead cost was applied to jobs, $ ? . Cost of goods manufactured for the year, $930,000. Sales for the year (all on account) totaled $2,000,000. These goods cost $960,000 according to their job cost sheets.   The balances in the inventory accounts at the beginning of the year were:         Raw Materials $ 46,000 Work in Process $ 37,000 Finished Goods $ 76,000     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.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
icon
Concept explainers
Topic Video
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 $399,000 of manufacturing overhead for an estimated allocation base of 1,050 direct labor-hours. The following transactions took place during the year:

 

  1. Raw materials purchased on account, $280,000.
  2. Raw materials used in production (all direct materials), $265,000.
  3. Utility bills incurred on account, $75,000 (80% related to factory operations, and the remainder related to selling and administrative activities).
  4. Accrued salary and wage costs:

 

     
Direct labor (1,100 hours) $ 310,000
Indirect labor $ 106,000
Selling and administrative salaries $

190,000

 

 

  1. Maintenance costs incurred on account in the factory, $70,000
  2. Advertising costs incurred on account, $152,000.
  3. Depreciation was recorded for the year, $88,000 (85% related to factory equipment, and the remainder related to selling and administrative equipment).
  4. Rental cost incurred on account, $113,000 (90% related to factory facilities, and the remainder related to selling and administrative facilities).
  5. Manufacturing overhead cost was applied to jobs, $ ? .
  6. Cost of goods manufactured for the year, $930,000.
  7. Sales for the year (all on account) totaled $2,000,000. These goods cost $960,000 according to their job cost sheets.

 

The balances in the inventory accounts at the beginning of the year were:

 

     
Raw Materials $ 46,000
Work in Process $ 37,000
Finished Goods $ 76,000
 

 

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.

 

 

 

Prepare a schedule of cost of goods sold.
Froya Fabrikker A/S
Schedule of Cost of Goods Sold
Transcribed Image Text:Prepare a schedule of cost of goods sold. Froya Fabrikker A/S Schedule of Cost of Goods Sold
Prepare an income statement for the year.
Froya Fabrikker A/S
Income Statement
For the Year Ended
Selling and administrative expenses:
$
%24
Transcribed Image Text:Prepare an income statement for the year. Froya Fabrikker A/S Income Statement For the Year Ended Selling and administrative expenses: $ %24
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 7 steps with 4 images

Blurred answer
Knowledge Booster
Costing Systems
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education