Question

Marcelino Co.'s March 31 inventory of raw materials is $88,000. Raw materials purchases in April are $600,000, and factory payroll cost in April is $366,000. Overhead costs incurred in April are: indirect materials, $57,000; indirect labor, $25,000; factory rent, $34,000; factory utilities, $19,000; and factory equipment depreciation, $58,000. 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		$	29,000			$	39,000
Direct labor			24,000				15,000
Applied overhead			12,000				7,500
Costs during April
Direct materials			140,000				210,000			$	115,000
Direct labor			103,000				152,000				104,000
Applied overhead			?				?				?
Status on April 30	Finished (sold)				Finished (unsold)					In process
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). 2)Problem 2-1A Part 2 Materials purchases (on credit). Direct materials used in production. Direct labor paid and assigned to Work in Process Inventory. Indirect labor paid and assigned to Factory Overhead. Overhead costs applied to Work in Process Inventory. Actual overhead costs incurred, including indirect materials. (Factory rent and utilities are paid in cash.) Transfer of Jobs 306 and 307 to Finished Goods Inventory. Cost of goods sold for Job 306. Revenue from the sale of Job 306. 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.

3)3. Prepare a schedule of cost of goods manufactured.

4)Compute gross profit for April.

4.2 Show how to present the inventories on the April 30 balance sheet.

Answer 1

Answer 1.
	Job 306	Job 307	Job 308	Total
From March
Direct Materials	29,000.00	39,000.00	-	68,000.00
Direct Labor	24,000.00	15,000.00	-	39,000.00
Applied Overhead - 50% of DL	12,000.00	7,500.00	-	19,500.00
Beginning Work in process	65,000.00	61,500.00	-	126,500.00
For April
Direct Materials	140,000.00	210,000.00	115,000.00	465,000.00
Direct Labor	103,000.00	152,000.00	104,000.00	359,000.00
Applied Overhead - 50% of DL	51,500.00	76,000.00	52,000.00	179,500.00
Total costs added in April	294,500.00	438,000.00	271,000.00	1,003,500.00
Total Costs (April 30)	359,500.00	499,500.00	271,000.00	1,130,000.00
Status on April 30	Finished (Sold)	Finished (Unsold)	In Process
April 30 cost included in	Cost of Goods Sold	Finished Goods Inventory	Work In Proces Inventory

Answer 2.
Journal Entry
Date	Particulars	Dr. Amt.	Cr. Amt.
a.	Raw Materials Inventory	600,000.00
	Accounts Payable		600,000.00
	(record the Raw materials purchased)
b.	Work in Process	465,000.00
	Raw Materials Inventory		465,000.00
	(record the direct materials used in production)
c.	Work in Process	359,000.00
	Salaries & Wages Payable		359,000.00
	(record the direct labor used in production)
d.	Factory Overhead	25,000.00
	Salaries Payable		25,000.00
	(record the indirect labor used in production)
e.	Work in Process	179,500.00
	Factory Overhead		179,500.00
	(Record the factory overhead applied)
f.	Factory Overhead	117,000.00
	Raw Materials Inventory		56,000.00
	Cash		61,000.00
	Accumulated Depreciation - Factory Equip.		57,000.00
	(record the factory overhead incurred)
g.	Finished Goods Inventory	859,000.00
	Work in Process		859,000.00
	(record the Job No 306 & 307 completed)
h.	Cost of Goods Sold	359,500.00
	Finished Goods Inventory		359,500.00
	(record cost of goods sold Job-306)
i.	Cash	665,000.00
	Sales Revenue		665,000.00
	(record the JoB 306 sold)
j.	Cost of Goods Sold	12,500.00
	Factory Overhead		12,500.00
	(record the underapplied overhead)
	Actual Overhead = $56,000 + $25,000 + $34,000 + $19,000 + $58,000
	Actual Overhead = $192,000
	Actual Overhead	192,000.00
	Applied Overhead	179,500.00
	Underapplied Overhead	12,500.00

Answer 3.
Schedule of Cost of Goods Manufactured
Direct Materials:
Raw Materials, Beginning Balance	88,000.00
Add: Raw Material Purchases	600,000.00
Total Raw Material Available	688,000.00
Less: Raw Material, Ending Balance	(223,000.00)
Raw Material used in Production		465,000.00
Direct Labor		359,000.00
Manufacturing Overhead Applied		179,500.00
Total Manufacturing Costs		1,003,500.00
Add: Work in Process, Beginning		126,500.00
		1,130,000.00
Less: Work in Process, Ending		(271,000.00)
Cost of Goods Manufactured		859,000.00
Answer 4.
Sales	665,000.00
Adjusted Cost of Goods Sold - $359,500 + $12,500	372,000.00
Gross Profit	293,000.00
Answer 4.2
Balance Sheet (Partial)
At April 30.
Assets
Current Assets
Raw Material - $223,000 - $57,000	166,000.00
Work in Process - Job 308	271,000.00
Finished Goods - Job 307	499,500.00	936,500.00