668 points Problem 226A Journal Entries TAccounts Financial

6.68 points Problem 2-26A Journal Entries; T-Accounts; Financial Statements [LO2-1, LO2-2, LO2-3, LO2-4, LO2-5, LO2-6, LO2-7) Froya Fabrikker N/S of Bergen, Norway, is a small company that manufactures specialty heavy equipment for use in North Sea oill 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 $360,000 of manufacturing overhead for an esimated allocation base of 900 direct labor-hours. The following transactions took place during the year (all purchases and services were oquired on account) a. Raw materiais purchased for use in production, $200,000. b. Raw materials requisitioned for use in production (al direct materials), $185,000 C. Utility bills were incurred, $70,000 (90% related to factory operations, and the remainder related to selling and administrative activities) d. Salary and wage costs were incurred Direct labor (975 hours) ndirect labor $230,000 90,000 Selling and admiristrative salaries$ 110,000 e. Maintenance costs were incurned in the factory, $54,000 . Advertising costs were incurred, $136.000 g Depreciation was recorded for the year $95,000 (es related to factory equemont, and the renander related to selling and administrative equipment) Rentaloost ncurredon buildings related to selling and administrative facilities) S120.000 (e5% related to factory operaions, and thermanar h. L Manufacuring overhead cost was applied to jobs, $ 7 Cost of goods manufactured for the year, $770,000 Sales for the year (ail on accoune) totaled $1 200,000. These goods ooat 800,000 according lo thair sb cost sheets The balances in the inventory accounts atl the beginning of the year were

Solution

Accounts Receivable:

Sales:

Raw Materials

Work in Process

Finished Goods

Cost of Goods Sold

Manufacturing Overhead

3. Schedule of Cost of Goods Manufactured :

4.

Schedule of Cost of Goods Sold

5. Froya Fabrikker A/S

Income Statement

For the year ended

6. Total manufacturing cost for Job 412 = $ 8,000 + 39/975 x $ 230,000 + 39 x 360,000 / 900 = $ 32,800

Unit product cost = $ 32,800 / 4 = $ 8,200

Price charged for Job 412 = $ 8,200 + 60% = $ 13,120 per unit.

Sales	1,200,000