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Problem 5-19 Journal Entries; T-Accounts; Cost Flows [LO4, LO5, LO7] Ravsten Company uses a job-order costing system. On January 1, the beginning of the current
Problem 5-19 Journal Entries; T-Accounts; Cost Flows [LO4, LO5, LO7] Ravsten Company uses a job-order costing system. On January 1, the beginning of the current year, the company's inventory were as follows: Raw materials Work in process Finished goods The company applies overhead cost to jobs on the basis of machine-hours. For the current year, the company estimated that work 36,000 machine-hours and incur $157,320 in manufacturing overhead cost. The following transactions were recorded f year: $ 17,200 $11,200 $ 32,400 a. Raw materials were purchased on account: $206,000. b. Raw materials were requisitioned for use in production: $196,000 (80% direct and 20% indirect). c. The following costs were incurred for employee services: Direct labour Indirect labour Sales commissions Administrative salaries $166,000 $ 28,200 $ 37,200 $ 82,400 d. Heat, power, and water costs were incurred in the factory: $43,200. e. Prepaid insurance expired during the year: $11,200 (90% relates to factory operations, and 10% relates to selling and admin activities). f. Advertising costs were incurred, $51,200. g. Depreciation was recorded for the year: $61,200 (85% relates to factory operations, and 15% relates to selling and administ activities). h. Manufacturing overhead cost was applied to production. The company recorded 40,000 machine-hours for the year. i. Goods that cost $494,400 to manufacture according to their job cost sheets were transferred to the finished goods wareho j. Sales for the year totalled $742,000 and were all on account. The total cost to manufacture these goods according to their sheets was $487,000.
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