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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 $351,000 of manufacturing overhead for an estimated allocation base of 900 direct labor-hours. The following transactions took place during the year: a. Raw materials purchased on account, $265,000. b. Raw materials used in production (all direct materials), $250,000. c. Utility bills incurred on account, $72,000 (85% related to factory operations, and the remainder related to selling and administrative activities). d. Accrued salary and wage costs: $ 295,000 $ 103,000 $ 175,000 Direct labor (980 hours) Indirect labor Selling and administrative salaries e. Maintenance costs incurred on account in the factory, $67,000 f. Advertising costs incurred on account, $149,000. g. Depreciation was recorded for the year, $85,000 (70% related to factory equipment, and the remainder related to selling and administrative equipment). h. Rental cost incurred on account, $110,000 (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, $900,000. k. Sales for the year (all on account) totaled $1,850,000. These goods cost $930,000 according to their job cost sheets. The balances in the inventory accounts at the beginning of the year were: $ 43,000 $ 34,000 $ 73,000 Raw Materials Work in Process Finished Goods

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 $351,000 of manufacturing overhead for an estimated allocation base of 900 direct labor-hours. The following transactions took place during the year: a. Raw materials purchased on account, $265,000. b. Raw materials used in production (all direct materials), $250,000. c. Utility bills incurred on account, $72,000 (85% related to factory operations, and the remainder related to selling and administrative activities). d. Accrued salary and wage costs: $ 295,000 $ 103,000 $ 175,000 Direct labor (980 hours) Indirect labor Selling and administrative salaries e. Maintenance costs incurred on account in the factory, $67,000 f. Advertising costs incurred on account, $149,000. g. Depreciation was recorded for the year, $85,000 (70% related to factory equipment, and the remainder related to selling and administrative equipment). h. Rental cost incurred on account, $110,000 (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, $900,000. k. Sales for the year (all on account) totaled $1,850,000. These goods cost $930,000 according to their job cost sheets. The balances in the inventory accounts at the beginning of the year were: $ 43,000 $ 34,000 $ 73,000 Raw Materials Work in Process Finished Goods

Principles of Cost Accounting
Principles of Cost Accounting
17th Edition
ISBN:9781305087408
Author:Edward J. Vanderbeck, Maria R. Mitchell
Publisher:Edward J. Vanderbeck, Maria R. Mitchell
Chapter2: Accounting For Materials
Section: Chapter Questions
Problem 15E: Kenkel, Ltd. uses backflush costing to account for its manufacturing costs. The trigger points are...
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Prepare journal entries to record the preceding transactions.

  • The raw materials were purchased for use in production, $265,000 on account.
Note: Enter debits before credits.
 
 
Transaction General Journal Debit Credit
a.
  • The raw materials used in production (all direct materials), $250,000.
Note: Enter debits before credits.
 
 
Transaction General Journal Debit Credit
b.      
  • The utility bills were incurred on account, $72,000 (85% related to factory operations, and the remainder related to selling and administrative activities).
Note: Enter debits before credits.
 
 
Transaction General Journal Debit Credit
c.
  • The salary and wage costs accrued were $295,000 (Direct labor), $103,000 (Indirect labor), $175,000 (Selling and administrative salaries).
Note: Enter debits before credits.
 
 
Transaction General Journal Debit Credit
d.
  • The maintenance costs were incurred on account in the factory, $67,000.
Note: Enter debits before credits.
 
 
Transaction General Journal Debit Credit
e.
  • The advertising costs were incurred on account, $149,000.
Note: Enter debits before credits.
 
 
Transaction General Journal Debit Credit
f.
  • The depreciation was recorded for the year, $85,000 (70% related to factory equipment, and the remainder related to selling and administrative equipment).
Note: Enter debits before credits.
 
 
Transaction General Journal Debit Credit
g.      
  • The entry for rental cost incurred on account on buildings, $110,000 (75% related to factory facilities, and the remainder related to selling and administrative facilities).
Note: Enter debits before credits.
 
 
Transaction General Journal Debit Credit
h.
  • The entry for manufacturing overhead cost applied to jobs.
Note: Enter debits before credits.
 
 
Transaction General Journal Debit Credit
i.
  • The cost of goods manufactured for the year, $900,000.
Note: Enter debits before credits.
 
 
Transaction General Journal Debit Credit
j.
  • The sales for the year (all on account) totaled $1,850,000.
Note: Enter debits before credits.
 
 
Transaction General Journal Debit Credit
k(1).
  • The goods cost $930,000 according to their job cost sheets.
Note: Enter debits before credits.
 
 
Transaction General Journal Debit Credit
k(2).
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 $351,000 of manufacturing overhead for an estimated allocation base of 900 direct labor-hours. The following transactions took place during the year: a. Raw materials purchased on account, $265,000. b. Raw materials used in production (all direct materials), $250,000. c. Utility bills incurred on account, $72,000 (85% related to factory operations, and the remainder related to selling and administrative activities). d. Accrued salary and wage costs: Direct labor (980 hours) $ 295,000 $ 103,000 $ 175,000 Indirect labor Selling and administrative salaries e. Maintenance costs incurred on account in the factory, $67,000 f. Advertising costs incurred on account, $149,000. g. Depreciation was recorded for the year, $85,000 (70% related to factory equipment, and the remainder related to selling and administrative equipment). h. Rental cost incurred on account, $110,000 (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, $900,000. k. Sales for the year (all on account) totaled $1,850,000. These goods cost $930,000 according to their job cost sheets. The balances in the inventory accounts at the beginning of the year were: $ 43,000 $ 34,000 $ 73,000 Raw Materials Work in Process Finished Goods
Transcribed Image Text: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 $351,000 of manufacturing overhead for an estimated allocation base of 900 direct labor-hours. The following transactions took place during the year: a. Raw materials purchased on account, $265,000. b. Raw materials used in production (all direct materials), $250,000. c. Utility bills incurred on account, $72,000 (85% related to factory operations, and the remainder related to selling and administrative activities). d. Accrued salary and wage costs: Direct labor (980 hours) $ 295,000 $ 103,000 $ 175,000 Indirect labor Selling and administrative salaries e. Maintenance costs incurred on account in the factory, $67,000 f. Advertising costs incurred on account, $149,000. g. Depreciation was recorded for the year, $85,000 (70% related to factory equipment, and the remainder related to selling and administrative equipment). h. Rental cost incurred on account, $110,000 (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, $900,000. k. Sales for the year (all on account) totaled $1,850,000. These goods cost $930,000 according to their job cost sheets. The balances in the inventory accounts at the beginning of the year were: $ 43,000 $ 34,000 $ 73,000 Raw Materials Work in Process Finished Goods
Required: 1. Prepare journal entries to record the preceding transactions. 2. Post your entries to T-accounts. (Don't forget to enter the beginning inventory balances above.) 3. Prepare a schedule of cost of goods manufactured. 4A. 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. Prepare an income statement for the year. Complete this question by entering your answers in the tabs below. Req 1 Req 2 Req 3 Req 4A Req 4B Req 5 Prepare journal entries to record the preceding transactions. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet 1 3 4 5 6 7 8 12 > The raw materials were purchased for use in production, $265,000 on account. Note: Enter debits before credits. Transaction General Journal Debit Credit а.
Transcribed Image Text:Required: 1. Prepare journal entries to record the preceding transactions. 2. Post your entries to T-accounts. (Don't forget to enter the beginning inventory balances above.) 3. Prepare a schedule of cost of goods manufactured. 4A. 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. Prepare an income statement for the year. Complete this question by entering your answers in the tabs below. Req 1 Req 2 Req 3 Req 4A Req 4B Req 5 Prepare journal entries to record the preceding transactions. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet 1 3 4 5 6 7 8 12 > The raw materials were purchased for use in production, $265,000 on account. Note: Enter debits before credits. Transaction General Journal Debit Credit а.
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