Question

Marcelino Co.'s March 31 inventory of raw materials is $88,000. Raw materials purchases in April are $580,000, and factory payroll cost in April is $362,000. Overhead costs incurred in April are: indirect materials, $59,000; indirect labor, $25,000; factory rent, $37,000; factory utilities, $21,000; and factory equipment depreciation, $55,000. The predetermined overhead rate is 50% of direct labor cost. Job 306 is sold for $670,000 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 $ 45,000 Direct labor 25,000 16,000 Applied overhead 12,500 8,000 Costs during April Direct materials 135,000 215,000 $ 120,000 Direct labor 105,000 150,000 104,000 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). 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. Prepare a schedule of cost of goods manufactured. Compute gross profit for April. *Please show all parts.*

Answer 1

		Job 306	Job 307	Job 308	Total
	Balances on March 31
	Direct materials	28,000	45,000
	Direct labor	25,000	16,000
	Applied overhead	12,500	8,000
	Beginning work in process	65,500	69,000
	Costs during April
	Direct materials	135,000	215,000	120,000	470,000
	Direct labor L	105,000	150,000	104,000	359,000
	Applied overhead (L*50%)	52500	75000	52000	179,500
	Total cost added in April	292,500	440,000	276,000	1,008,500
	Total cost (april 30)	358,000	509,000	276,000
Transaction	General Journal	Dr	Cr
a	Raw materials inventory	580,000
	Accounts payable		580,000
b	Work In Process Inventory	470,000
	Raw materials inventory		470,000
c	Work In Process Inventory	359,000
	Cash		359,000
d	Factory overhead	25,000
	Cash		25,000
e	Work In Process Inventory	179,500
	Factory overhead		179,500
f1	Factory overhead	59,000
	Raw materials inventory		59,000
f2	Factory overhead	37,000
	Cash		37,000
f3	Factory overhead	55,000
	Accumulated depreciation-factory equipment		55,000
f4	Factory overhead	21,000
	Cash		21,000
g	Finished goods inventory	867,000
	Work In Process Inventory		867,000
h	Cost of good sold	358,000
	Finished goods inventory		358,000
i	Cash	670000
	Sales		670,000
f	Cost of goods sold	17,500
	Factory overhead		17,500
	Factory overhead underapplied	17500
	(59000+25000+37000+21000+55000)-179500
ans	Statement of Cost of Goods manufactured
	Direct Material used	470,000
	Direct Labor	359,000
	Factory overhead applied	179,500
	Total manufacturing cost	1,008,500
	Add: work in process Mar 31	134,500
	Total work in process	1,143,000
	Less: Ending, Work in process	276,000
	Cost of Goods Manufactured	867,000
ans	Gross profit
	Sales	670000
	Less: Cost of good sold (358000+17500)	375500
	Gross profit	294500