Question
Ravsten Company uses a job-order costing system. The company applies overhead cost to jobs on the basis of machine-hours. For the current year, the company
Ravsten Company uses a job-order costing system. |
The company applies overhead cost to jobs on the basis of machine-hours. For the current year, the company estimated that it would work 30,000 machine-hours and incur $150,000 in manufacturing overhead cost. The following transactions occurred during the year: |
a. | Raw materials requisitioned for use in production, $304,000 (75% direct and 25% indirect). |
b. | The following costs were incurred for employee services: |
Direct labor | $ | 175,000 |
Indirect labor | $ | 33,000 |
Sales commissions | $ | 25,000 |
Administrative salaries | $ | 40,000 |
c. | Heat, power, and water costs incurred in the factory, $65,000. |
d. | Insurance costs, $25,000 (85% relates to factory operations, and 15% relates to selling and administrative activities). |
e. | Advertising costs incurred, $65,000. |
f. | Depreciation recorded for the year, $75,000 (80% relates to factory operations, and 20% relates to selling and administrative activities). |
g. | The company used 55,000 machine-hours during the year. |
h. | Goods that cost $495,000 to manufacture according to their job cost sheets were transferred to the finished goods warehouse. |
i. | Sales for the year totaled $730,000. The total cost to manufacture these goods according to their job cost sheets was $490,000. |
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