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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 $20,000 $11,600 $30,800 The company applies overhead cost to jobs on the basis of machine-hours. For the current year, the company estimated that it would work 36,800 machine-hours and incur $171,120 in manufacturing overhead cost. The following transactions were recorded for the year: a. Raw materials were purchased on account: $216,000. b. Raw materials were requisitioned for use in production: $198,000 (80% direct and 20% indirect). c. The following costs were incurred for employee services: Direct labour Indirect labour Sales commissions $166,400 $ 28,600 $ 38,400 Administrative salaries $ 83,200 d. Heat, power, and water costs were incurred in the factory: $45,600. e. Prepaid insurance expired during the year: $14,000 (85% relates to factory operations, and 15% relates to selling and administrative activities). f. Advertising costs were incurred, $54,000. g. Depreciation was recorded for the year: $64,800 (90% relates to factory operations, and 10% relates to selling and administrative activities). h. Manufacturing overhead cost was applied to production. The company recorded 41,600 machine-hours for the year. i. Goods that cost $515,400 to manufacture according to their job cost sheets were transferred to the finished goods warehouse. j. Sales for the year totalled $737,200 and were all on account. The total cost to manufacture these goods according to their job cost sheets was $508,800.
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