roya Fabrikker A/S of Bergen, Norway, 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 based on 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 occurred during the year: Raw materials purchased on account, $275,000. Raw materials used in production (all direct materials), $260,000. Utility bills incurred on account, $74,000 (95% related to factory operations, and the remainder related to selling and administrative activities). Accrued salary and wage costs: Direct labor (1,100 hours) $ 305,000 Indirect labor $ 105,000 Selling and administrative salaries $ 185,000 Maintenance costs incurred on account in the factory, $69,000 Advertising costs incurred on account, $151,000. Depreciation recorded for the year, $87,000 (80% related to factory equipment, and the remainder related to selling and administrative equipment). Rental cost incurred on account, $112,000 (85% related to factory facilities, and the remainder related to selling and administrative facilities). Manufacturing overhead cost applied to jobs, $ ? . Cost of goods manufactured, $920,000. Sales for the year (all on account) totaled $1,950,000. These goods cost $950,000 according to their job cost sheets. The beginning balances in the inventory accounts were: Raw Materials $ 45,000 Work in Process $ 36,000 Finished Goods $ 75,000 Required: 1. Prepare journal entries to record the preceding transactions.

Name: Froya Fabrikker A/S of Bergen, Norway, manufactures specialty heavy eq
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Description: Froya Fabrikker A/S of Bergen, Norway, 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 based on direct labor hours. Its predetermined

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ISBN:9781259964947

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Chapter1: Financial Statements And Business Decisions

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Froya Fabrikker A/S of Bergen, Norway, 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 based on 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 occurred during the year:

Raw materials purchased on account, $275,000.
Raw materials used in production (all direct materials), $260,000.
Utility bills incurred on account, $74,000 (95% related to factory operations, and the remainder related to selling and administrative activities).
Accrued salary and wage costs:

Direct labor (1,100 hours) $ 305,000

Indirect labor $ 105,000

Selling and administrative salaries $ 185,000
Maintenance costs incurred on account in the factory, $69,000
Advertising costs incurred on account, $151,000.
Depreciation recorded for the year, $87,000 (80% related to factory equipment, and the remainder related to selling and administrative equipment).
Rental cost incurred on account, $112,000 (85% related to factory facilities, and the remainder related to selling and administrative facilities).
Manufacturing overhead cost applied to jobs, $ ? .
Cost of goods manufactured, $920,000.
Sales for the year (all on account) totaled $1,950,000. These goods cost $950,000 according to their job cost sheets.

Direct labor (1,100 hours)	$ 305,000
Indirect labor	$ 105,000
Selling and administrative salaries	$ 185,000

The beginning balances in the inventory accounts were:

Raw Materials	$ 45,000
Work in Process	$ 36,000
Finished Goods	$ 75,000

Required:

1. Prepare journal entries to record the preceding transactions.

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