ACCT 241 Week 3 Assignment Help 4

ACCT 241 Week 3 Assignment Help 4 | Quiz | American University 

1.

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 $360,000 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, $200,000.

b.  Raw materials used in production (all direct materials), $185,000.

C   Utility bills incurred on account, $70,000 (90% related to factory operations, and the    remainder related to selling and administrative activities).

d. Accrued salary and wage costs:

Direct labor (975 hours)          $230,000

Indirect labor   $90,000

Selling and administrative salaries       $110,000

e.         Maintenance costs incurred on account in the factory, $54,000.

f.          Advertising costs incurred on account, $136,000.

g.         Depreciation was recorded for the year, $95,000 (80% related to factory equipment, and the remainder related to selling and administrative equipment).

h.         Rental cost incurred on account, $120,000 (85% 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, $770,000.

k.         Sales for the year (all on account) totaled $1,200,000. These goods cost $800,000 according to their job cost sheets.

The balances in the inventory accounts at the beginning of the year were:

Raw Materials  $30,000

Work in Process           $21,000

Finished Goods            $60,000

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.

2.

Gold Nest Company of Guandong, China, is a family-owned enterprise that makes birdcages for the South China market. The company sells its birdcages through an extensive network of street vendors who receive commissions on their sales.

The company uses a job-order costing system in which overhead is applied to jobs on the basis of direct labor cost. Its predetermined overhead rate is based on a cost formula that estimated $330,000 of manufacturing overhead for an estimated activity level of $200,000 direct labor dollars. At the beginning of the year, the inventory balances were as follows:

Raw materials  $25,000

Work in process           $10,000

Finished goods $40,000

During the year, the following transactions were completed:

a.         Raw materials purchased on account, $275,000.

b.         Raw materials used in production, $280,000 (materials costing $220,000 were charged directly to jobs; the remaining materials were indirect).

c.         Costs for employee services were incurred as follows:

Direct labor      $180,000

Indirect labor   $72,000

Sales commissions       $63,000

Administrative salaries $90,000

________________________________________

a.         Rent for the year was $18,000 ($13,000 of this amount related to factory operations, and the remainder related to selling and administrative activities).

b.         Utility costs incurred in the factory, $57,000.

c.         Advertising costs incurred, $140,000.

d.         Depreciation recorded on equipment, $100,000. ($88,000 of this amount related to equipment used in factory operations; the remaining $12,000 related to equipment used in selling and administrative activities.)

e.         Manufacturing overhead cost was applied to jobs, $. ? 

f.          Goods that had cost $675,000 to manufacture according to their job cost sheets were completed.

g.         Sales for the year (all paid in cash) totaled $1,250,000. The total cost to manufacture these goods according to their job cost sheets was $700,000.

Required:

1. Prepare journal entries to record the transactions for the year.

2. Prepare T-accounts for each inventory account, Manufacturing Overhead, and Cost of Goods Sold. Post relevant data from your journal entries to these T-accounts (don’t forget to enter the beginning balances in your inventory accounts).

3A. Is Manufacturing Overhead under applied or over applied for the year?

3B. Prepare a journal entry to close any balance in the Manufacturing Overhead account to Cost of Goods Sold.

4. Prepare an income statement for the year. (All of the information needed for the income statement is available in the journal entries and T-accounts you have prepared.)