Question:

Ravsten Company uses a job-order costing system. On January 1, the beginning of the current year, the company's inventory balances were as follows:

Raw materials $23,000

Work in process $12,800

Finished goods $31,400

The company applies overhead cost to jobs on the basis of machine-hours. For the current year, the company estimated that it would work 37,400 machine-hours and incur $157,080 in manufacturing overhead cost. The following transactions were recorded for the year:

a. Raw materials were purchased on account: $228,000.

b. Raw materials were requisitioned for use in production: $204,000 (85% direct and 15% indirect).

c. The following costs were incurred for employee services:

Direct labour $171,200

Indirect labour $29,800

Sales commissions $40,200

Administrative salaries $85,600

d. Heat, power, and water costs were incurred in the factory: $48,300.

e. Prepaid insurance expired during the year: $17,000 (80% relates to factory operations, and 20% relates to selling and administrative activities).

f. Advertising costs were incurred, $57,000.

g. Depreciation was recorded for the year: $68,400 (75% relates to factory operations, and 25% relates to selling and administrative activities).

h. Manufacturing overhead cost was applied to production. The company recorded 42,800 machine-hours for the year.

i. Goods that cost $521,000 to manufacture according to their job cost sheets were transferred to the finished goods warehouse.

j. Sales for the year totalled $765,100 and were all on account. The total cost to manufacture these goods according to their job cost sheets was 513,200

Answer is complete and correct. No Transaction General Journal Debit Credit 1 a Raw materials 228,000 Accounts payable 228,000 2 b. Work in process 173,400 Manufacturing overhead 30,600 Raw materials 204,000 3 C. Work in process 171,200 Manufacturing overhead 29,800 Sales commissions expense 40,200 Administrative salaries expense 85,600 Salaries and wages payable 326,800 48,300 4 d. Manufacturing overhead ch O W~' my work mode : This shows what is correct or incorrect for the work you have completed so far. It does net 3215'\". 4 d. Manufacturing overhead 9 43,300 0 4 Accounts payable 0 48,300 9 1 . E 5 9. Manufacturing overhead 0 13.600 9 P j 1 Insurance expense 9 3,400 a Prepaid insurance a 17,000 a 6 1'. Advertising expense _ ' f a 57,000 a Accounts payable , ' ' ' a 57,000 a A; 7 9. Manufacturing overhead 0 51.300 9 ' Depreciation expense 0 17,100 a l' Accumulated depreciation a 68,400 9' \\- I. P. 8 h. Work in process a 179,760 a u..." ,5..- "4.... A. . A I .4711 7nd leck my work mode : This shows what is correct or incorrect for the work you have completed so far. It does not ind" Depreciation expense Accumulated depreciation 0 17,100 a 9 _} 68,400 a]! _L Work in process i-'L Accounts receivable h. j Work in process a 179,760 0 Manufacturing overhead 0 179,760 a l 9 i. Finished goods Salas Cost of goods sold Finished goods \fb. 1/3,400 521,000 1. J. | 513,200 C. V 171,200 End. Bal. 513,200 h . V 179,760 End. Bal. 16, 160 Finished Goods Beg. Bal. 31,400 521,000 513,200 j. End. Bal. 39,200 3-a. Is manufacturing overhead underapplied or overapplied for the year? Underapplied overhead to search O EI 9 wReturn to quest 3-b. Prepare a journal entry to properly dispose of any balance in the Manufacturing Overhead account. (Do not round intermediate calculations and round your final answers to 2 decimal places. If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) x Answer is complete but not entirely correct. No Event General Journal Debit Credit A Manufacturing overhead 6, 160.00 Cost of goods sold 5,560.00 x Finished goods V 425.00 X Work in process 175.00 X to search O wCheck my work mode : This shows what is correct or incorrect for the work you have completed so x Answer is not complete. RAVSTEN COMPANY Income Statement For the Year Ended December 31 Sales $ 765, 100 Cost of goods sold 518,760 X Gross profit 246,340 Selling and administrative expenses: Sales commissions 40,200 Administrative salaries 85,600 Insurance expense 3,400 Advertising expenses 57,000 186,200 Operating income V $ 60,140 here to search O W