Question

Problem 15-1A Production costs computed and recorded; reports prepared LO P1, P2, P3, P4

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Marcelino Co.'s March 31 inventory of raw materials is $86,000. Raw materials purchases in April are $560,000, and factory payroll cost in April is $385,000. Overhead costs incurred in April are: indirect materials, $56,000; indirect labor, $24,000; factory rent, $31,000; factory utilities, $21,000; and factory equipment depreciation, $56,000. The predetermined overhead rate is 50% of direct labor cost. Job 306 is sold for $700,000 cash in April. Costs of the three jobs worked on in April follow.

	Job 306				Job 307				Job 308
Balances on March 31
Direct materials		$	29,000			$	37,000
Direct labor			24,000				18,000
Applied overhead			12,000				9,000
Costs during April
Direct materials			136,000				220,000			$	120,000
Direct labor			104,000				153,000				104,000
Applied overhead			?				?				?
Status on April 30	Finished (sold)				Finished (unsold)					In process

Problem 15-1A Part 1

Required:
1. Determine the total of each production cost incurred for April (direct labor, direct materials, and applied overhead), and the total cost assigned to each job (including the balances from March 31).

1. Materials purchases (on credit).
2. Direct materials used in production.
3. Direct labor paid and assigned to Work in Process Inventory.
4. Indirect labor paid and assigned to Factory Overhead.
5. Overhead costs applied to Work in Process Inventory.
6. Actual overhead costs incurred, including indirect materials. (Factory rent and utilities are paid in cash.)
7. Transfer of Jobs 306 and 307 to Finished Goods Inventory.
8. Cost of goods sold for Job 306.
9. Revenue from the sale of Job 306.
10. Assignment of any underapplied or overapplied overhead to the Cost of Goods Sold account. (The amount is not material.)

2. Prepare journal entries for the month of April to record the above transactions.

Answer 1

			Job 306	Job 307	Job 308
Balances on March 31
Direct Materials			$   29,000.00	$   37,000.00
Direct Labor			$   24,000.00	$   18,000.00
Applied OH			$   12,000.00	$     9,000.00
		(A)	$   65,000.00	$   64,000.00
Costs during April
Direct Materials			$ 136,000.00	$ 220,000.00	$ 120,000.00
Direct Labor			$ 104,000.00	$ 153,000.00	$ 104,000.00
Applied OH			$   52,000.00	$   76,500.00	$   52,000.00
		(B)	$ 292,000.00	$ 449,500.00	$ 276,000.00
Total cost assigned to Jobs			$ 357,000.00	$ 513,500.00	$ 276,000.00

1)	Total of production cost for April
	Direct Materials		$ 476,000.00
	Direct Labor		$ 361,000.00
	Applied OH		$ 180,500.00
	Total costs assigned to jobs
	Job 306		$ 357,000.00
	Job 307		$ 513,500.00
	Job 308		$ 276,000.00

2)	Journal Entries
	Events	Particulars			Debit	Credit
	a)	Raw Materials			$ 560,000.00
		To Accounts Payable				$ 560,000.00
	b)	WIP			$ 476,000.00
		To Raw Materials				$ 476,000.00
	c)	WIP			$ 361,000.00
		To Cash				$ 361,000.00
	d)	Factory OH			$   24,000.00
		To Cash				$   24,000.00
	e)	WIP			$ 180,500.00
		To Factory OH				$ 180,500.00
	f.i)	Factory OH			$   56,000.00
		To Raw Materials				$   56,000.00
	f.ii)	Factory OH			$   31,000.00
		To Cash				$   31,000.00
	f.iii)	Factory OH			$   21,000.00
		To Cash				$   21,000.00
	f.iv)	Factory OH			$   56,000.00
		To Accumulated Depreciation				$   56,000.00
	g)	Finished Goods			$ 870,500.00
		To WIP				$ 870,500.00
	h)	Cost of Goods sold			$ 357,000.00
		To Finished Goods				$ 357,000.00
	i)	Cash			$ 700,000.00
		To Sales				$ 700,000.00
	j)	Cost of Goods Sold			$     7,500.00
		To Factory OH				$     7,500.00
		($ 188000 - $ 180500)