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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 -

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 $378,000 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, $285,000.
b. Raw materials used in production (all direct materials), $270,000.
c. Utility bills incurred on account, $76,000(85% related to factory operations, and the remainder related to selling and administrative activities).
d. Accrued salary and wage costs:
Direct labor (950 hours) $ 315,000
Indirect labor $ 107,000
Selling and administrative salaries $ 195,000
e. Maintenance costs incurred on account in the factory, $71,000
f. Advertising costs incurred on account, $153,000.
g. Depreciation recorded for the year, $89,000(70% related to factory equipment, and the remainder related to selling and administrative equipment).
h. Rental cost incurred on account, $114,000(75% related to factory facilities, and the remainder related to selling and administrative facilities).
i. Manufacturing overhead cost applied to jobs, $?.
j. Cost of goods manufactured, $940,000.
k. Sales for the year (all on account) totaled $2,050,000. These goods cost $970,000 according to their job cost sheets.
The beginning balances in the inventory accounts were:
Raw Materials $ 47,000
Work in Process $ 38,000
Finished Goods $ 77,000
Required:
1. Prepare journal entries to record the preceding transactions.
2. Post your entries to T-accounts. (Dont forget to enter the beginning inventory balances above.)
3. Prepare a schedule of cost of goods manufactured.
4A. Prepare a journal entry to close any balance in the Manufacturing Overhead account to Cost of Goods Sold.
4B. Prepare a schedule of cost of goods sold.
5. Prepare an income statement.

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