Ravsten Company uses a job order costing system On January 1, the beginning of the current year, the companys inventory balances were as follows Raw materials $ 20,000 Work in process $ 11,600 Finished goods $ 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 Raw materials were purchased on account $216,000 Raw materials were requisitioned for use in production $198,000 (80 direct and 20 indirect) The following costs were incurred for employee services Direct labour $ 166,400 Indirect labour $ 28,600 Sales commissions $ 38,400 Administrative salaries $ 83,200 Heat, power, and water costs were incurred in the factory $45,600 Prepaid insurance expired during the year $14,000 (85 relates to factory operations, and 15 relates to selling and administrative activities) Advertising costs were incurred, $54,000 Depreciation was recorded for the year $64,800 (90 relates to factory operations, and 10 relates to selling and administrative activities) Manufacturing overhead cost was applied to production The company recorded 41,600 machine hours for the year Goods that cost $515,400 to manufacture according to their job cost sheets were transferred to the finished goods warehouse 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 Required 1 Prepare journal entries to record the transactions given above (Do not round intermediate calculations If no entry is required for a transaction event, select No journal entry required in the first account field ) 2 Prepare T accounts for inventories, Manufacturing Overhead, and Cost of Goods Sold Post relevant data from your journal entries to these T accounts (dont forget to enter the opening balances in your inventory accounts) Compute an ending balance in each account 3 a Is manufacturing overhead underapplied or overapplied for the year multiple choice Underapplied overhead Overapplied overhead 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 ) 4 Prepare an income statement for the year (Do not round intermediate calculations and round your final answers to nearest whole dollar amount )

The Answer is in the image, click to view ...

Answered step by step

Verified Expert Solution

Link Copied!

Question

1 Approved Answer

Posted on Oct 23, 2024

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

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


Raw materials	$	20,000
Work in process	$	11,600
Finished goods	$	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:

Raw materials were purchased on account: $216,000.
Raw materials were requisitioned for use in production: $198,000 (80% direct and 20% indirect).
The following costs were incurred for employee services:


Direct labour	$	166,400
Indirect labour	$	28,600
Sales commissions	$	38,400
Administrative salaries	$	83,200

Heat, power, and water costs were incurred in the factory: $45,600.
Prepaid insurance expired during the year: $14,000 (85% relates to factory operations, and 15% relates to selling and administrative activities).
Advertising costs were incurred, $54,000.
Depreciation was recorded for the year: $64,800 (90% relates to factory operations, and 10% relates to selling and administrative activities).
Manufacturing overhead cost was applied to production. The company recorded 41,600 machine-hours for the year.
Goods that cost $515,400 to manufacture according to their job cost sheets were transferred to the finished goods warehouse.
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.

Required:

1. Prepare journal entries to record the transactions given above. (Do not round intermediate calculations. If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

2. Prepare T-accounts for inventories, Manufacturing Overhead, and Cost of Goods Sold. Post relevant data from your journal entries to these T-accounts (dont forget to enter the opening balances in your inventory accounts). Compute an ending balance in each account.

3-a. Is manufacturing overhead underapplied or overapplied for the year?

multiple choice

Underapplied overhead
Overapplied overhead

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.)

4. Prepare an income statement for the year. (Do not round intermediate calculations and round your final answers to nearest whole dollar amount.)