Froya 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 that 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 $336,000 of manufacturing overhead for an estimated allocation base of 1,050 direct labor-hours. The following transactions took place during the year: a. Raw materials purchased on account, $245,000. b. Raw materials used in production (all direct materials), $230,00O. c. Utility bills incurred on account, $68,000 (85% related to factory operations, and the remainder related to selling and administrative activities) d. Accrued salary and wage costs Direct labor (1,125 hours) Indirect labor Selling and administrative salaries 275,000 $ 99,000 $155, 000 e. Maintenance costs incurred on account in the factory, $63,000 f. Advertising costs incurred on account, $145,000. g. Depreciation was recorded for the year, $81,000 (70% related to factory equipment, and the remainder related to selling and administrative equipment) h. Rental cost incurred on account, $106,000 (75% related to factory facilities, and the remainder related to selling and administrative facilities). i. Manufacturing overhead cost was applied to jobs, $ j. Cost of goods manufactured for the year, $860,000. k. Sales for the year (all on account) totaled $1,650,000. These goods cost $890,000 according to their job cost sheets

Solution

Accounts receivable Sales Beg.bal Beg.bal k. 1,650,000 1,650,000 k. end bal 1,650,000 1,650,000 end bal Raw Materials cost of goods sold Beg.Bal 39,000 Beg.Bal a. 245,000 230,000 b. k. 890,000 End bal 54,000 End bal 890,000 Work in process Manufacturing overhead Beg Bal 30,000 Beg.Bal b. 230,000 860,000 j c. 57800 360,000 i d. 275,000 d. 99,000 i. 360000 e. 63,000 g. 56700 end bal 35,000 h. 79500 4,000 End bal finished goods Advertising expense Beg bal 69,000 Beg.bal j 860,000 890,000 k f. 145,000 End bal 39,000 end bal 145,000 Accumulated Depreciation Utilities expense beg.bal Beg bal g. 81,000 g. c. 10200 End bal 81,000 end bal 10,200 Accounts payable Salaries expense Beg.bal Beg.Bal 245,000 a. d. 155,000 68,000 c. 63,000 e. 145,000 f. 106,000 h. End bal 627,000 end bal 155,000 Depreciation expense Salaries & wages payable Beg.bal Beg.bal g. 24300 529000 d. End bal 24,300 end bal 529,000 rent expense beg bal h. 26500 End bal 26,500