Ravsten Company uses a joborder costing system On January 1

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 $22,500 $10,180 $30,540 The company applies overhead cost to jobs on the basis of machine-hours. For the current year, the company estimated that it would work 38,000 machine-hours and incur $156,940 in manufacturing overhead cost. The following transactions were recorded for the year a. Raw materials were purchased on account: $226,000 b. Raw materials were requisitioned for use in production: S203 ,000 (85% direct and 15% indirect). c. The following costs were incurred for employee services: Direct labour Indirect labour Sales commissions Administrative salaries $170,500 29,600 39,900 $85,200 d. Heat, power, and water costs were incurred in the factory: $47,850. e. Prepaid insurance expired during the year: $16,500 (80% relates to factory operations, and 20% relates to selling and administrative activities) f Advertising costs were incurred, $56,500. g. Depreciation was recoded for the year: S67 800 75% relates to factory operations, and 25% relates to h. Manufacturing overhead cost was applied to production. The company recorded 42,600 machine-hours L Goods that cost $516,400 to manufacture according to their job cost sheets were transferred to the j. Sales for the year totalled $760,000 and were all on account. The total cost to manufacture these goods selling and administrative activities) for the year finished goods warehouse. according to their job cost sheets was $509,000. 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.) No Transaction General Journal Debit Raw materials 226,000 a.

Solution

Predetermined Fixed Overhead          = 156940 / 38000
   = 4.13 Per Machine Hour
Applied manufacturing overhead = 175938
Actual manufacturing overhead incurred = 171950
Overapplied overhead = 3988

No.	General Journal	Debit	Credit
1	Manufacturing Overhead	3,988
	Cost of Goods Sold		3,988
	( To record Overapplied Overheads)
	Prepare an Income Statement
	Ravsten Company
	Income Statement
	For the Year Ending December 31
	Sales		760,000
	Cost of goods sold		505,012
	Gross profit		254,988
	Selling & Adminstrative Expenses
	Sales Commissions	39,900
	Adminstrative Salaries	85,200
	Insurance expense	3,300
	Advertising expense	56,500
	Depreciation expense	16,950	201,850
	Operating Income		53,138