Homework SourseFroya Fabrikker AS of Bergen Norway is a small company that
Froya Fabrikker A/S of Bergen, Norway, is a small company that manufactures specialty heavy equipment for use in North Sea oil fields. The company uses a job-order costing system and applies manufacturing overhead cost to jobs on the basis of direct labor-hours. Its predetermined overhead rate was based on a cost formula that estimated $357,000 of manufacturing overhead for an estimated allocation base of 1,020 direct labor-hours. The following transactions took place during the year (all purchases and services were acquired on account):
Depreciation was recorded for the year, $84,000 (75% related to factory equipment, and the remainder related to selling and administrative equipment).
Rental cost incurred on buildings, $109,000 (80% related to factory operations, and the remainder related to selling and administrative facilities).
Cost of goods manufactured for the year, $890,000.
Sales for the year (all on account) totaled $1,800,000. These goods cost $920,000 according to their job cost sheets.
The balances in the inventory accounts at the beginning of the year were:
Prepare journal entries to record the above data. (If no entry is required for a transaction/event, select \"No journal entry required\" in the first account field.)
Post your entries to T-accounts. (Don’t forget to enter the opening inventory balances above.) Determine the ending balances in the inventory accounts and in the Manufacturing Overhead account.
Prepare a journal entry to close any balance in the Manufacturing Overhead account to Cost of Goods Sold. Prepare a schedule of cost of goods sold. (If no entry is required for a transaction/event, select \"No journal entry required\" in the first account field.)
Prepare an income statement for the year.
Job 412 was one of the many jobs started and completed during the year. The job required $9,200 in direct materials and 32 hours of direct labor time at a total direct labor cost of $10,100. If the job contained five units and the company billed at 70% above the unit product cost on the job cost sheet, what price per unit would have been charged to the customer?
| Froya Fabrikker A/S of Bergen, Norway, is a small company that manufactures specialty heavy equipment for use in North Sea oil fields. The company uses a job-order costing system and applies manufacturing overhead cost to jobs on the basis of direct labor-hours. Its predetermined overhead rate was based on a cost formula that estimated $357,000 of manufacturing overhead for an estimated allocation base of 1,020 direct labor-hours. The following transactions took place during the year (all purchases and services were acquired on account): |
Solution
Debit
Credit
a)
Raw material
260000
account payable
260000
b)
Work in process
245000
Raw material
245000
c)
Factory overhead
56800
Selling overhead
14200
Accounts payable
71000
d)
Work in Process
290000
Factory overhead
102000
Salary expenses
170000
Wages and Salaries payable
562000
e)
Factory overhead
66000
Accounts payable
66000
f)
Advertising expenses
148000
accounts payable
148000
g)
Factory overhead
63000
Depreciation
21000
Accumulated Depreciation
84000
h)
Factory overhead
87200
Rent
21800
Accounts payable
109000
i)
Work in process
383250
Factory overhead
383250
j)
Finished goods
890000
Work in process
890000
k)
Accounts receivable
1800000
Sales
1800000
l)
Cost of goods sold
920000
Finished goods
920000
Pre determined overhead rate = Factory overhead cost applied / Allocation base that is direct labour hour
357000/1020 = $350 per hour
therefore overhead will be = 350*1095= 383250
2 Answer) Raw material Account
Debit
Credit
260000
245000
| Debit | Credit | ||
| a) | Raw material | 260000 | |
| account payable | 260000 | ||
| b) | Work in process | 245000 | |
| Raw material | 245000 | ||
| c) | Factory overhead | 56800 | |
| Selling overhead | 14200 | ||
| Accounts payable | 71000 | ||
| d) | Work in Process | 290000 | |
| Factory overhead | 102000 | ||
| Salary expenses | 170000 | ||
| Wages and Salaries payable | 562000 | ||
| e) | Factory overhead | 66000 | |
| Accounts payable | 66000 | ||
| f) | Advertising expenses | 148000 | |
| accounts payable | 148000 | ||
| g) | Factory overhead | 63000 | |
| Depreciation | 21000 | ||
| Accumulated Depreciation | 84000 | ||
| h) | Factory overhead | 87200 | |
| Rent | 21800 | ||
| Accounts payable | 109000 | ||
| i) | Work in process | 383250 | |
| Factory overhead | 383250 | ||
| j) | Finished goods | 890000 | |
| Work in process | 890000 | ||
| k) | Accounts receivable | 1800000 | |
| Sales | 1800000 | ||
| l) | Cost of goods sold | 920000 | |
| Finished goods | 920000 |
