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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
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 Work in process Finished goods $19,000 $11,200 $30,600 The company applies overhead cost to jobs on the basis of machine-hours. For the current year, the company estimated that it would work 36,600 machine-hours and incur $166,530 In manufacturing overhead cost. The following transactions were recorded for the year: a. Raw materials were purchased on account: $212,000. 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 $164,800 $ 28,200 $ 37,800 $ 82,400 d. Heat, power, and water costs were incurred in the factory: $44,700. e. Prepaid Insurance expired during the year: $13,000 (85% relates to factory operations, and 15% relates to selling and administrative activities). f. Advertising costs were incurred, $53,000. g. Depreciation was recorded for the year: $63,600 (90% relates to factory operations, and 10% relates to selling and administrative activities). h. Manufacturing overhead cost was applied to production. The company recorded 41,200 machine-hours for the year. I. Goods that cost $506,500 to manufacture according to their job cost sheets were transferred to the finished goods warehouse. J. Sales for the year totalled $727,900 and were all on account. The total cost to manufacture these goods according to their job cost sheets was $500,300.
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