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 Work in process Finished goods $16,300 $10,300 $30,600 The company applies overhead cost to jobs on the basis of machine-hours. For the current year, the company estimated that it would work 36,000 machine-hours and incur $154,080 in manufacturing overhead cost. The following transactions were recorded for the year: a. Raw materials were purchased on account: $201,500. b. Raw materials were requisitioned for use in production: $191,500 (80% direct and 20% indirect). c. The following costs were incurred for employee services: Direct labour Indirect labour Sales commissions Administrative salaries $161,500 $ 27,300 $ 36,300 $ 80,600 d. Heat, power, and water costs were incurred in the factory: $42,300. e. Prepaid insurance expired during the year: $10,300 (90% relates to factory operations, and 10% relates to selling and administrative activities). f. Advertising costs were incurred, $50,300. g. Depreciation was recorded for the year: $60,200 (85% relates to factory operations, and 15% relates to selling and administrative activities). h. Manufacturing overhead cost was applied to production. The company recorded 40,000 machine-hours for the year. i. Goods that cost $483,600 to manufacture according to their job cost sheets were transferred to the finished goods warehouse. j. Sales for the year totalled $710,500 and were all on account. The total cost to manufacture these goods according to their job cost sheets was $478,000.
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 Work in process Finished goods $16,300 $10,300 $30,600 The company applies overhead cost to jobs on the basis of machine-hours. For the current year, the company estimated that it would work 36,000 machine-hours and incur $154,080 in manufacturing overhead cost. The following transactions were recorded for the year: a. Raw materials were purchased on account: $201,500. b. Raw materials were requisitioned for use in production: $191,500 (80% direct and 20% indirect). c. The following costs were incurred for employee services: Direct labour Indirect labour Sales commissions Administrative salaries $161,500 $ 27,300 $ 36,300 $ 80,600 d. Heat, power, and water costs were incurred in the factory: $42,300. e. Prepaid insurance expired during the year: $10,300 (90% relates to factory operations, and 10% relates to selling and administrative activities). f. Advertising costs were incurred, $50,300. g. Depreciation was recorded for the year: $60,200 (85% relates to factory operations, and 15% relates to selling and administrative activities). h. Manufacturing overhead cost was applied to production. The company recorded 40,000 machine-hours for the year. i. Goods that cost $483,600 to manufacture according to their job cost sheets were transferred to the finished goods warehouse. j. Sales for the year totalled $710,500 and were all on account. The total cost to manufacture these goods according to their job cost sheets was $478,000.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text: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
Work in process
Finished goods
$16,300
$10,300
$30,600
The company applies overhead cost to jobs on the basis of machine-hours. For the current year, the company estimated that it would
work 36,000 machine-hours and incur $154,080 in manufacturing overhead cost. The following transactions were recorded for the
year:
a. Raw materials were purchased on account: $201,500.
b. Raw materials were requisitioned for use in production: $191,500 (80% direct and 20% indirect).
c. The following costs were incurred for employee services:
Direct labour
Indirect labour
Sales commissions
Administrative salaries
$161,500
$ 27,300
$ 36,300
$ 80,600
d. Heat, power, and water costs were incurred in the factory: $42,300.
e. Prepaid insurance expired during the year: $10,300 (90% relates to factory operations, and 10% relates to selling and administrative
activities).
f. Advertising costs were incurred, $50,300.
g. Depreciation was recorded for the year: $60,200 (85% relates to factory operations, and 15% relates to selling and administrative
activities).
h. Manufacturing overhead cost was applied to production. The company recorded 40,000 machine-hours for the year.
i. Goods that cost $483,600 to manufacture according to their job cost sheets were transferred to the finished goods warehouse.
j. Sales for the year totalled $710,500 and were all on account. The total cost to manufacture these goods according to their job cost
sheets was $478,000.
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