Question

GL1501 - Based on Problem 15-1A Marcelino Company LO C2, P1, P2, P3, P4

Marcelino Co.’s March 31 inventory of raw materials is $80,000. Raw materials purchases in April are $500,000, and factory payroll cost in April is $363,000. Overhead costs incurred in April are: indirect materials, $50,000; indirect labor, $23,000; factory rent, $32,000; factory utilities, $19,000; and factory equipment depreciation, $51,000. The predetermined overhead rate is 50% of direct labor cost. Job 306 is sold for $635,000 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			$	35,000
Direct labor			20,000				18,000
Applied overhead			10,000				9,000
Costs during April
Direct materials			135,000				220,000			$	100,000
Direct labor			85,000				150,000				105,000
Applied overhead			?				?				?
Status on April 30	Finished (sold)				Finished (unsold)					In process

General Journal tab - Prepare journal entries to record the transactions of Marcelino Company during the month of April.

Job Costs tab - Calculate the total cost, and account classification for each job worked on during April.

Cost of Goods Manufactured tab - Prepare a schedule of cost of goods manufactured for Marcelino Company during the month of April.

Gross Profit tab - Calculate the gross profit on the sale of job(s) during April

REQUIREMENTS

• General Journal
• General Ledger
• Trial Balance
• Job Costs
• Cost of Goods Mfg
• Gross Profit

Answer 1

Solution 1:

Journal Entries - Marcelino Co
Event	Particulars	Debit	Credit
a	Raw material inventory Dr	$500,000.00
	To Accounts Payable		$500,000.00
	(To record purchase of raw material)
b	Work In Process Dr	$455,000.00
	To Raw material inventory		$455,000.00
	(To record raw material used in production)
c	Work In Process Dr	$340,000.00
	To Cash		$340,000.00
	(To record direct labor payment and assigment to production)
d	Factory overhead Dr	$23,000.00
	To Cash		$23,000.00
	(To record Indirect labor payment and assigment to factory overhead)
e	Work In Process Dr	$170,000.00
	To Factory Overhead		$170,000.00
	(To apply overhead to production)
f1	Factory Overhead Dr	$50,000.00
	To Raw material inventory		$50,000.00
	(To record indirect material used)
f2	Factory Overhead Dr	$32,000.00
	To Cash		$32,000.00
	(To record factory rent)
f3	Factory Overhead Dr	$19,000.00
	To Cash		$19,000.00
	(To record factory utilities)
f4	Factory Overhead Dr	$51,000.00
	To Accumulated Depreciation		$51,000.00
	(To record factory depreciation)
g	Finished goods inventory Dr	$828,500.00
	To Work In Process		$828,500.00
	(Being completed jobs transferred to finished goods)
h	Cost of goods sold Dr	$321,500.00
	To Finished goods inventory		$321,500.00
	(To record cost of goods sold for Job 306)
i	Cash Dr	$635,000.00
	To Sales Revenue		$635,000.00
	(To record sales of Job 306)
j	Cost of goods sold Dr	$5,000.00
	To Factory Overhead		$5,000.00
	(To close underapplied overhead to COGS)

solution 2:

Computation of production cost incurred in april and total cost assigned to each job
Particulars	Job 306	Job 307	Job 308	Total
From March:
Direct material	$29,000.00	$35,000.00	$0.00	$64,000.00
Direct labor	$20,000.00	$18,000.00	$0.00	$38,000.00
Applied overhead (50% of direct labor)	$10,000.00	$9,000.00	$0.00	$19,000.00
Beginning Goods in Process	$59,000.00	$62,000.00	$0.00	$121,000.00
For April:
Direct material	$135,000.00	$220,000.00	$100,000.00	$455,000.00
Direct labor	$85,000.00	$150,000.00	$105,000.00	$340,000.00
Applied overhead (50% of direct labor)	$42,500.00	$75,000.00	$52,500.00	$170,000.00
Total Cost added in April	$262,500.00	$445,000.00	$257,500.00	$965,000.00
Total Costs (April 30)	$321,500.00	$507,000.00	$257,500.00	$1,086,000.00
Status on April 30	Finished (Sold)	Finished (Unsold)	In Process
April 30 cost included in	Cost of goods sold	Finished goods inventory	Work In Process Inventory

Solution 3:

Marcelino company
Schedule of cost of goods manufactured
For the month ended April 30
Particulars	Amount
Direct material	$455,000.00
Direct labor	$340,000.00
Applied overhead (50% of DL Cost)	$170,000.00
Total manufacturing costs	$965,000.00
Add: Beginning WIP	$121,000.00
Total cost of work in process	$1,086,000.00
Less: Ending WIP	$257,500.00
Cost of goods manufactured	$828,500.00

Solution 4: Adjusted cost of goods sold = Unadjusted cost of goods sold + Underapplied overhead = $321,500 + $5,000 = $326,500 Gross profit = Sales Revenue - Cost of goods sold =$635,000 - $326,500 = $308,500