4 Froya Fabrtkker AS of Bergen Norway 1 a small company that

4 Froya Fabrtkker A/S of Bergen, Norway 1 a small company that manufactures speciality heavy equipment for use in North Sea of 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 baced on a cost formula that estimated $357000 ofmanufacturing overhead for an estimated allocation base of 1020 direct labor-hours. The following transactions took place during the year 10 a. Raw materials purchased on account, $260.000 b. Raw materials used in production (all direct materials), $245.000 c. Utity blls incurred on account, S710008 0% related to factory operations, and the remainder related to seling and administrative activities). d. Accrued salary and wage costs Direct Labor (1,895 hours) $ 2,000 e. Malntenance costs Incurred on account In the factory, $66.000 t Advertising cosss incurred on account $148,000 g. Depreciation was recorded for the year, $84,000 (75% related to factory equpment, and the remainder related to selling and h Rental cost incurred on ccount $10900(80% related to factory facilites. and the remainder related to selling and administrative facines L Manufacturing overhead cost was applied to Jobs. S2 J. Cost of goods manufactured for the year, $890,000. k Sales for the year (all on account) totaled St.800.000. These goods COst $920.000 according to their job cost sheets The balances in the inventory accounts ar the boginning of the year wore 42,000 13,000 Required: . Prepare Journal entries to record the preceding transactions. 2 Post your entries to T-accounts. (Dont forget to enter the beginning Inventory balances above) 3. Prepare a schedule of cost of goods manufactured A Prepare a journal entry to close any balance in the Manufacturing Overhead account to Cost of Goods Sold 4B. Prepare a schedule of cost of goods sold 5. Propare an income statement for the year Complete this question by entering your answers in the tabs below. Req i Req 2 Req 3 Req 4A Req 4D Req 5 Prepare a schedule of cost of goods manufectured Direct materials e Ending raw mapenas Vaterials usad in production

Solution

3.

4A

4B

5

Froya Fabrikker A/S
Schedule of Cost of Goods Manufactured
Direct materials:
Beginning raw materials inventory	42000
Add: Purchases of raw materials	260000
Total raw materials available	302000
Less: Ending raw materials inventory	57000
Materials used in production		245000
Direct labor		290000
Manufacturing overheads ($357000 x 1095/1020)		383250
Total manufacturing costs incurred		918250
Add: Beginning work in process inventory		33000
Total manufacturing costs		951250
Less: Ending work in process inventory		61250
Cost of goods manufactured $		890000