Ravsten Company uses a job-order costing system. On January 1, the beginning of the current year, the company's inventory balanceswere as follows:Raw materials$25,500$13,800Work in processFinished goods$31,900The company applies overhead cost to jobs on the basis of machine-hours. For the current year, the company estimated that it wouldwork 37,900 machine-hours and incur $151,600 in manufacturing overhead cost. The following transactions were recorded for theyear:a. Raw materials were purchased on account: $238,000.b. Raw materials were requisitioned for use in production: $209,000 (90% direct and 10% indirect).c. The following costs were incurred for employee services:Direct labour$175,200$ 30,800Indirect labourSales commissions$ 41,700Administrative salaries$ 87,600d. Heat, power, and water costs were incurred in the factory: $50,550.

Name: Ravsten Company uses a job-order costing system. On January 1, the be
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Description: Ravsten Company uses a job-order costing system. On January 1, the beginning of the current year, the company's inventory balanceswere as follows:Raw materials$25,500$13,800Work in processFinished goods$31,900The company applies overhead cost to job

Calculation of overhead rate on the basis of machine hours = Manufacturing overhead cost/Machine…

Business

Accounting

overhead cost to jobs on the basis of machine-hours. For the current year, the c hours and incur $151,600 in manufacturing overhead cost. The following transac purchased on account: $238,000. requisitioned for use in production: $209,000 (90% direct and 10% indirect). were incurred for employee services:

overhead cost to jobs on the basis of machine-hours. For the current year, the c hours and incur $151,600 in manufacturing overhead cost. The following transac purchased on account: $238,000. requisitioned for use in production: $209,000 (90% direct and 10% indirect). were incurred for employee services:

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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Concept explainers

Variance Analysis

In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.

Standard Costing

The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.

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Question

Ravsten Company uses a job-order costing system. On January 1, the beginning of the current year, the company's inventory balances
were as follows:
Raw materials
$25,500
$13,800
Work in process
Finished goods
$31,900
The company applies overhead cost to jobs on the basis of machine-hours. For the current year, the company estimated that it would
work 37,900 machine-hours and incur $151,600 in manufacturing overhead cost. The following transactions were recorded for the
year:
a. Raw materials were purchased on account: $238,000.
b. Raw materials were requisitioned for use in production: $209,000 (90% direct and 10% indirect).
c. The following costs were incurred for employee services:
Direct labour
$175,200
$ 30,800
Indirect labour
Sales commissions
$ 41,700
Administrative salaries
$ 87,600
d. Heat, power, and water costs were incurred in the factory: $50,550.

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