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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 company uses

Froya Fabrikker A/S of Bergen, Norway, is a small company that 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 on the basis of 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 took place during the year:

  1. Raw materials purchased on account, $285,000.
  2. Raw materials used in production (all direct materials), $270,000.
  3. Utility bills incurred on account, $76,000 (85% related to factory operations, and the remainder related to selling and administrative activities).
  4. Accrued salary and wage costs:

Direct labor (950 hours) $ 315,000
Indirect labor $ 107,000
Selling and administrative salaries $ 195,000

  1. Maintenance costs incurred on account in the factory, $71,000
  2. Advertising costs incurred on account, $153,000.
  3. Depreciation was recorded for the year, $89,000 (70% related to factory equipment, and the remainder related to selling and administrative equipment).
  4. Rental cost incurred on account, $114,000 (75% related to factory facilities, and the remainder related to selling and administrative facilities).
  5. Manufacturing overhead cost was applied to jobs, $?.
  6. Cost of goods manufactured for the year, $940,000.
  7. Sales for the year (all on account) totaled $2,050,000. These goods cost $970,000 according to their job cost sheets.

The balances in the inventory accounts at the beginning of the year were:

Raw Materials $ 47,000
Work in Process $ 38,000
Finished Goods $ 77,000

3. Prepare a schedule of cost of goods manufactured.

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Froya Fabrikker A/S Schedule of Cost of Goods Manufactured Direct materials: Total raw materials available Direct materials used in production Total manufacturing costs added to production Total manufacturing costs to account for 0 Cost of goods manufactured

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