Q4. PLEASE DO ALL THE REQUIRED PARTS. THANK YOU! Froya Fabrikker A/S of Bergen,

Question

Q4. PLEASE DO ALL THE REQUIRED PARTS. THANK YOU!

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 $372,000 of manufacturing overhead for an estimated allocation base of 1,200 direct labor-hours. The following transactions took place during the year: a. Raw materials purchased on account, $240,000. b. Raw materials used in production (all direct materials), $225,000. c. Utility bills incurred on account, $67,000(95% related to factory operations, and the remainder related to selling and administrative activities) d. Accrued salary and wage costs: Direct labor (1,275 hours) Indirect labor Selling and administrative salaries 270,000 $ 98,000 150,000 e. Maintenance costs incurred on account in the factory, $62,000 f. Advertising costs incurred on account, $144,000. g. Depreciation was recorded for the year, $80,000 (85% related to factory equipment, and the remainder related to selling and administrative equipment). h. Rental cost incurred on account, $105,000 (90% 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, $850,000 k. Sales for the year (all on account) totaled $1,600,000. These goods cost $880,000 according to their job cost sheets.

Explanation / Answer

Solution 1:

Predetermined overhead rate = Estimated overhead / Estimated direct labor hours = $372,000 / 1200 = $310 per hour

Solution 2:

Solution 3:

Solution 4a:

Solution 4B:

Solution 5:

Journal Entries Event Particulars Debit Credit a Raw material inventory Dr $240,000.00           To Accounts Payable $240,000.00 (To record purchase of raw material) b Work In Process Inventory Dr $225,000.00           To Raw material inventory $225,000.00 (To record material used in production) c Manufacturing overhead Dr $63,650.00 Selling and administrative expenses Dr $3,350.00           To Accounts Payable $67,000.00 (To record utilities expense on account) d Work In Process Inventory Dr $270,000.00 Manufacturing overhead Dr $98,000.00 Selling and administrative expenses Dr $150,000.00           To Salaries and Wages Payable $518,000.00 (To accure salary and wages) e Manufacturing overhead Dr $62,000.00           To Accounts Payable $62,000.00 (To record maintenance cost) f Selling and administrative expenses Dr $144,000.00           To Accounts Payable $144,000.00 (To record advertising expense) g Manufacturing overhead Dr $68,000.00 Selling and administrative expenses Dr $12,000.00           To Accumulated Depreciation - Equipment $80,000.00 (To record depreciation) h Manufacturing overhead Dr $94,500.00 Selling and administrative expenses Dr $10,500.00           To Accounts Payable $105,000.00 (To record rental expense) i Work In Process Inventory Dr $395,250.00           To Manufacturing overhead (1275*$310) $395,250.00 (To record manufacturing overhead applied) j Finished goods inventory Dr $850,000.00           To Work In Process Inventory $850,000.00 (To record cost of goods manufactured) K-1 Accounts receivables Dr $1,600,000.00           To Sales Revenue $1,600,000.00 (To record sales) K-2 Cost of goods sold Dr $880,000.00           To Finished goods inventory $880,000.00 (To record COGS)

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