BUS 1B Froya Fabrikker A/S of Bergen, Norway,
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 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 estimated allocation base of 900 direct labor-hours. The following transactions took place during the year (all purchases and services were acquired on account): |
| a. | Raw materials purchased for use in production, $200,000. |
| b. | Raw materials requisitioned for use in production (all 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) | $ | 230,000 |
| Indirect labor | $ | 90,000 |
| Selling and administrative salaries | $ | 110,000 |
| e. | Maintenance costs were incurred in the factory, $54,000. |
| f. | Advertising costs were incurred, $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 buildings, $120,000 (85% related to factory operations, 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 thei calculate the manufacturing overhead cost was applied to jobs |
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Rating:
/5
Solution: BUS 1B Froya Fabrikker A/S of Bergen, Norway,