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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
Froya Fabrikker AS of Bergen, Norway, is a small company that manufactures specialty heavy equipment for use in North Sea oil fields. The company uses a joborder costing system that applies manufacturing overhead cost to jobs on the basis of direct laborhours. Its predetermined overhead rate was based on a cost formula that estimated $ of manufacturing overhead for an estimated allocation base of direct laborhours. The following transactions took place during the year:
Raw materials purchased on account, $
Raw materials used in production all direct materials $
Utility bills incurred on account, $ related to factory operations, and the remainder related to selling and administrative activities
Accrued salary and wage costs:
Direct labor hours $
Indirect labor $
Selling and administrative salaries
$
Maintenance costs incurred on account in the factory, $
Advertising costs incurred on account, $
Depreciation was recorded for the year, $ related to factory equipment, and the remainder related to selling and administrative equipment
Rental cost incurred on account, $ 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, $
Sales for the year all on account totaled $ These goods cost $ according to their job cost sheets.
The balances in the inventory accounts at the beginning of the year were:
Raw Materials $
Work in Process $
Finished Goods $
Required:
Prepare journal entries to record the preceding transactions.
Post your entries to Taccounts. Dont forget to enter the beginning inventory balances above.
Prepare a schedule of cost of goods manufactured.
A Prepare a journal entry to close any balance in the Manufacturing Overhead account to Cost of Goods Sold.
B Prepare a schedule of cost of goods sold.
Prepare an income statement for the year.
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