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 $380,000 of manufacturing overhead for an estimated allocation base of 1,000 direct labor-hours. The following transactions took place during the year: a. Raw materials purchased on account, $275,000. b. Raw materials used in production (all direct materials), $260,000. c. Utility bills incurred on account, $74,000 (95% related to factory operations, and the remainder related to selling and administrative activities) d. Accrued salary and wage costs: Direct labor (1,100 hours) Indirect labor 305,000 $105,000 185,000 Selling and administrative salaries e. Maintenance costs incurred on account in the factory, $69,000 f. Advertising costs incurred on account, $151,000 g. Depreciation was recorded for the year, $87,000 (80% related to factory equipment, and the remainder related to selling and administrative equipment). h. Rental cost incurred on account, $112,000 (85% related to factory facilities, and the remainder related to selling and administrative facilities) i. Manufacturing overhead cost was applied to jobs, $ ? j. Cost of goods manufactured for the year, $920,000. k. Sales for the year (all on account) totaled $1,950,000. These goods cost $950,000 according to their job cost sheets The balances in the inventory accounts at the beginning of the year were: 45,000 $36,000 $ 75,000 Raw Materials Work in Process Finished Goods Required: 1. Prepare journal entries to record the preceding transactions. 2. Post your entries to T-accounts. (Don't 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 for the year. Req 1 Req 2 Reg 3 Reg 4A Req 4B Req 5 Post your entrles to T-accounts. (Don't forget to enter the beglnning Inventory balances above.) Accounts Receivable Sales eg Bal Beg Bal End. Bal. End, Bal. Raw Materials Cost of Goods Sold Beg Bal eg Bal k End. Bal End Bal Work in Process Manufacturing Overhead Beg. Bal Beg. Bal End Bal End Bal Advertising Expense Finished Goods Beg. Bal Beg. Bal. End Bal End. Bal. Accumulated Depreciation Utilities Expense Reg Ba Beg Bal End. Bal. End. Bal. Salaries Expense Accounts Payable Beg Bal Beg Bal End. Bal End. Bal Salaries & Wages Payable Depreciation Expense Reg Bal Beg Bal End. Bal End. Bal Rent Expense Beg Bal. End. Bal Complete this question by entering your answers in the tabs below. Req 1 Req 2 Req 3 Req 4A Req 4B Req 5 Prepare a schedule of cost of goods manufactured. Froya Fabrikker A/S Schedule of Cost of Goods Manufactured Direct materials $ Beginning raw materials inventory 45,000 275,000 Add: Purchases of raw materials 420,000 Total raw materials available Less: Ending raw materials inventory 160,000 Materials used in production 260,000 305,000 $ Direct labor Manufacturing overhead applied to work in cess Total manufacturing costs Add: Beginning work in process inventory 0 Less: Ending work in process inventory Cost of goods manufactured Req 2 Req 4A Complete this question by entering your answers in the tabs below. Req 1 Req 2 Req 3 Req 4A Req 4B Req 5 Prepare a schedule of cost of goods sold. Froya Fabrikker A/S Schedule of Cost of Goods Sold Beginning raw materials inventory Add: Cost of goods manufactured $ 45,000 502,000 Cost of goods available for sale 418,000 Less: Ending finished goods inventory 66,100 Unadjusted cost of goods sold Less: Overapplied overhead 928,900 8,900 Adjusted cost of goods sold 920,000 $ Req 5
