Question

Marcelino Co.'s March 31 inventory of raw materials is $83,000. Raw materials purchases in April are $530,000, and factory payroll cost in April is $385,000. Overhead costs incurred in April are: indirect materials, $57,000; indirect labor, $24,000; factory rent, $37,000; factory utilities, $20,000; and factory equipment depreciation, $61,000. The predetermined overhead rate is 50% of direct labor cost. Job 306 is sold for $665,000 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		$	28,000			$	44,000
Direct labor			25,000				14,000
Applied overhead			12,500				7,000
Costs during April
Direct materials			135,000				215,000			$	110,000
Direct labor			103,000				155,000				103,000
Applied overhead			?				?				?
Status on April 30	Finished (sold)				Finished (unsold)					In process

Problem 02-1A Part 4

4-a. Compute gross profit for April.
4-b. Show how to present the inventories on the April 30 balance sheet.

Answer 1

Answer 4-a.

Gross profit in April for job 306

Sales	665000
Less: Cost of goods sold*	355000
Gross Profit	$310000

Answer 4-b.

Inventories

Raw material*	96000
Work in Process*	264500
Finished goods*	512500
Total inventories	$873000

Working Note:

	job 306	job 307	job 308
Balance on March 31
Direct material	28000	44000
Direct labor	25000	14000
Applied overhead	12500	7000
Cost during April
Direct materials	135000	215000	110000
Direct labor	103000	155000	103000
Applied overhead (50% of direct labor)	51500 (103000 * 50%)	77500 (155000 * 50%)	51500 (103000 * 50%)
Total cost	$355000	$512500	$264500
	Cost of goods sold	Finished goods	Work in process

Working Note:

Raw material

Balance on March 31	83000
Add: Purchase	530000
Total raw material available	613000
Less: Direct material used(135000+215000+110000)	460000
Less: Indirect material used	57000
Balance on April 30	$96000