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 $$360,000$ of manufacturing overhead for an estimated allocation base of

$900$ direct labor$-$hours. The following transactions occurred during the year:

a$.$ Raw materials purchased on account, $$200,000.$

b$.$ Raw materials used in production $($all direct materials$),$ $$185,000.$

c$.$ Utility bills incurred on account, related to factory operations, and the

remainder related to selling and administrative activities$).$

d$.$ Accrued salary and wage costs:

e$.$ Maintenance costs incurred on account in the factory, $$54,000.$

f$.$ Advertising costs incurred on account, $$136,000.$

g$.$ Depreciation recorded for the year, $$95,000(80\%$ related to factory equipment, and the

remainder related to selling and administrative equipment$).$

h$.$ Rental cost incurred on account, $$120,000(85\%$ related to factory facilities, and the

remainder related to selling and administrative facilities$).$

i$.$ Manufacturing overhead cost applied to jobs, $ $?$question mark.

j$.$ Cost of goods manufactured, $$770,000.$

k$.$ Sales $($all on account$)$ totaled $$1,200,000.$ These goods cost $$800,000$ according to their

job cost sheets.

The beginning balances in the inventory accounts were:

Requirements:

Compute the company's predetermined manufacturing overhead rate for the year.

Prepare journal entries to record the preceding transactions.

Post your entries to $T-$accounts.

Prepare a schedule of the cost of goods manufactured.

Prepare a journal entry to dispose under or over$-$allocated of the manufacturing overhead

account to Cost of Goods Sold. Post this entry to manufacturing overhead T$-$accounts.

Prepare a schedule of the cost of goods sold.

Prepare an income statement.