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. a. Raw materials purchased on account, $280,000. b. Raw materials used in production (all direct materials), $285,000. c. Utility bills incurred on account, $75,000 (80% related to factory operations, and the remainder related to selling and administrative activities). d. Accrued salary and wage costs: Direct labor (1.100 hours) Indirect labor Selling and administrative salaries $ 310,000 $ 106,000 $ 190,000 e. Maintenance costs incurred on account in the factory, $70,000 f. Advertising costs incurred on account, $152,000. 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 account, $113,000 (90% 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, $930,000. k. 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: $ 46,000 $ 37,000 $76.000 Raw Materials Work in Process Finished Goods 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.

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Chapter1: Financial Statements And Business Decisions
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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.
a. Raw materials purchased on account, $280,000.
b. Raw materials used in production (all direct materials), $265.000.
c. Utility bills incurred on account, $75,000 (80% related to factory operations, and the remainder related to selling and administrative activities).
d. Accrued salary and wage costs:
Direct labor (1.100 hours)
Indirect labor
Selling and administrative salaries
$ 310,000
$ 106,000
$ 190,000
e. Maintenance costs incurred on account in the factory, $70,000
f. Advertising costs incurred on account, $152,000.
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 account, $113,000 (90% related to factory facilities, and the remainder related to selling and administrative facilities).
1. Manufacturing overhead cost was applied to jobs, $?
j. Cost of goods manufactured for the year, $930,000.
k. 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:
$ 46,000
$ 37,000
$.76.000
Raw Materials
Work in Process
Finished Goods
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.
Transcribed Image Text: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. a. Raw materials purchased on account, $280,000. b. Raw materials used in production (all direct materials), $265.000. c. Utility bills incurred on account, $75,000 (80% related to factory operations, and the remainder related to selling and administrative activities). d. Accrued salary and wage costs: Direct labor (1.100 hours) Indirect labor Selling and administrative salaries $ 310,000 $ 106,000 $ 190,000 e. Maintenance costs incurred on account in the factory, $70,000 f. Advertising costs incurred on account, $152,000. 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 account, $113,000 (90% related to factory facilities, and the remainder related to selling and administrative facilities). 1. Manufacturing overhead cost was applied to jobs, $? j. Cost of goods manufactured for the year, $930,000. k. 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: $ 46,000 $ 37,000 $.76.000 Raw Materials Work in Process Finished Goods 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.
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