Froya Fabril

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 $374,000 of manufacturing overhead for an estimated allocation base of 1,100 direct labor-hours The following transactions took place during the year: a. Raw materials purchased on account, $235,000 b. Raw materials used in production (all direct materials), $220,000. c. Utility bills incurred on account, $66,000 (90% related to factory operations, and the remainder related to selling and administrative activities). d. Accrued salary and wage costs: Direct labor (1,175 hours) Indirect labor Selling and administrative salaries $ 265,aa $ 97,aa $ 145,aa e. Maintenance costs incurred on account in the factory, $61,000 f. Advertising costs incurred on account, $143,000. g. Depreciation was recorded for the year, $91,000 (80% related to factory equipment, and the remainder related to selling and administrative equipment). h. Rental cost incurred on account, $116,000 (85% related to factory facilities, and the remainder related to selling and administrative facilities). l. Manufacturing overhead cost was applied to jobs, S ? _ Cost of goods manufactured for the year, $840,000. k. Sales for the year (all on account) totaled $1,550,000 These goods cost $870,000 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: $ 37,aa $ 28,aa $ 67,aa 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.