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Problem 2 - 2 6 A Journal Entries; T - Accounts; Financial Statements [ LO 2 - 1 , LO 2 - 2 , LO

Problem 2-26A Journal Entries; T-Accounts; Financial Statements [LO2-1, LO2-2, LO2-3, LO2-4, LO2-5, LO2-6, LO2-7]
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 and 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 $351,500 of manufacturing overhead for an estimated allocation base of 950 direct labor-hours. The following transactions took place during the year (all purchases and services were acquired on account):
a. Raw materials purchased for use in production, $215,000.
b. Raw materials requisitioned for use in production (all direct materials), $200,000.
c. Utility bills were incurred, $62,000(85% related to factory operations, and the remainder related to selling and administrative activities).
d. Salary and wage costs were incurred:
Direct labor (1,025 hours) $ 245,000
Indirect labor $ 93,000
Selling and administrative salaries $ 125,000
e. Maintenance costs were incurred in the factory, $57,000.
f. Advertising costs were incurred, $139,000.
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 buildings, $112,000(85% related to factory operations, 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, $800,000.
k.
Sales for the year (all on account) totaled $1,350,000. These goods cost $830,000 according to their job cost sheets.
The balances in the inventory accounts at the beginning of the year were:
Raw materials $ 33,000
Work in process $ 24,000
Finished Goods $ 63,000
Required:
1.
Prepare journal entries to record the above data. 3. Prepare a schedule of cost of goods manufactured. 4.
Prepare a journal entry to close any balance in the Manufacturing Overhead account to Cost of Goods Sold. Prepare a schedule of cost of goods sold. 5..
Job 412 was one of the many jobs started and completed during the year. The job required $8,300 in direct materials and 40 hours of direct labor time at a total direct labor cost of $9,200. If the job contained five units and the company billed at 60% above the unit product cost on the job cost sheet, what price per unit would have been charged to the customer?
Prepare an income statement for the year.

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