Question

Problem 15-1A Production costs computed and recorded; reports prepared LO C2, P1, P2, P3, P4

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Marcelino Co.'s March 31 inventory of raw materials is $83,000. Raw materials purchases in April are $590,000, and factory payroll cost in April is $385,000. Overhead costs incurred in April are: indirect materials, $55,000; indirect labor, $27,000; factory rent, $39,000; factory utilities, $20,000; and factory equipment depreciation, $59,000. The predetermined overhead rate is 50% of direct labor cost. Job 306 is sold for $640,000 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		$	30,000			$	38,000
Direct labor			21,000				18,000
Applied overhead			10,500				9,000
Costs during April
Direct materials			136,000				210,000			$	100,000
Direct labor			102,000				154,000				102,000
Applied overhead			?				?				?
Status on April 30	Finished (sold)				Finished (unsold)					In process

rev: 02_06_2017_QC_CS-77766

References

Section BreakProblem 15-1A Production costs computed and recorded; reports prepared LO C2, P1, P2, P3, P4

1.

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).
	Job 306 Job 307 Job 308 April Total From March Direct Materials $30,000 $38,000 $68,000 Direct Labor 21,000 18,000 39,000 Applied overhead 10,500 9,000 19,500 Beginning goods in process $0 For April Direct Materials 136,000 210,000 100,000 446,000 Direct Labor 102,000 154,000 102,000 358,000 Applied overhead 0 Total costs added in April 238,000 364,000 202,000 804,000 Total costs (April 30) $0 Status on April 30 Finished (sold) Finished (unsold) In process April 30 cost included in:

2.

Problem 15-1A Part 2

a.	Materials purchases (on credit).
b.	Direct materials used in production.
c.	Direct labor paid and assigned to Work in Process Inventory.
d.	Indirect labor paid and assigned to Factory Overhead.
e.	Overhead costs applied to Work in Process Inventory.
f.	Actual overhead costs incurred, including indirect materials. (Factory rent and utilities are paid in cash.)
g.	Transfer of Jobs 306 and 307 to Finished Goods Inventory.
h.	Cost of goods sold for Job 306.
i.	Revenue from the sale of Job 306.
j.	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.

Transaction Index : ..... A. Record the entry for Materials purchases (on credit). Record the direct materials used in production. Record the Direct labor paid and assigned to Work in Process Inventory. Record the indirect labor paid and assigned to Factory Overhead. Record the entry for Overhead costs applied to Work in Process Inventory. Record the cost of indirect materials used. Record the cost of factory utilities, paid in cash. Record depreciation on factory equipment. Record the cost of factory rent, paid in cash. Record the entry for transfer of Jobs 306 and 307 to Finished Goods Inventory. Record the Cost of goods sold for Job 306. Record the revenue from the sale of Job 306. Record the entry for assignment of any underapplied or overapplied overhead to the Cost of Goods Sold. Note: Enter debits before credits. Transaction General Journal Debit Credit a. + Problem 15-1A Part 3 3. Prepare a schedule of cost of goods manufactured. MARCELINO COMPANY Schedule of Cost of Goods Manufactured For Month Ended April 30 Total manufacturing costs 0 Total cost of work in process 0 Cost of goods manufactured

Problem 15-1A Part 4

4.1	Compute gross profit for April.
	Gross Profit= 4.2 Show how to present the inventories on the April 30 balance sheet. Inventories Raw Materials = Work in Progress= Finished Goods= Total Inventories= $

Answer 1

1
	Job 306	Job 307	Job 308	April Total
From March
Direct Materials	30000	38000		68000
Direct Labor	21000	18000		39000
Applied overhead	10500	9000		19500
Beginning goods in process	61500	65000	0	126500
For April
Direct Materials	136000	210000	100000	446000
Direct Labor	102000	154000	102000	358000
Applied overhead	51000	77000	51000	179000
Total costs added in April	289000	441000	253000	983000
Total costs (April 30)	350500	506000	253000	1109500
Status on April 30	Finished (sold)	Finished (unsold)	In process
April 30 cost included in:	Cost of goods sold	Finished goods inventory	Goods in process inventory
2
		Debit	Credit
1	Raw materials inventory	590000
	Accounts Payable		590000
2	Work in Process inventory	446000
	Raw materials inventory		446000
3	Work in Process inventory	358000
	Cash		358000
4	Factory overhead	27000
	Cash		27000
5	Work in Process inventory	179000
	Factory overhead		179000
6	Factory overhead	55000
	Raw materials inventory		55000
7	Factory overhead	20000
	Cash		20000
8	Factory overhead	59000
	Accumulated depreciation -factory equipment		59000
9	Factory overhead	39000
	Cash		39000
10	Finished goods inventory	856500
	Work in Process inventory		856500
11	Cost of goods sold	350500
	Finished goods inventory		350500
12	Cash	640000
	Sales		640000
13	Cost of goods sold	21000
	Factory overhead		21000
3
Schedule of cost of goods manufactured
For month ended April 30
Direct materials used	446000
Direct labor used	358000
Factory overhead applied	179000
Total manufacturing costs	983000
Add: Work in Process, March 31	126500
Total cost of work in Process	1109500
Less: Work in Process, April 30	253000
Cost of goods manufactured	856500
4.1
Gross Profit	268500
4.2
Inventories
Raw materials	172000	=83000+590000-446000-55000
Work in Process	253000
Finished goods	506000
Total inventories	931000
Workings:
Actual factory overhead:
Indirect materials	55000
Indirect labor	27000
Factory rent	39000
Factory utilities	20000
Factory depreciation equipment	59000
Actual factory overhead	200000
Applied overhead	179000
Underapplied overhead	21000
Sales	640000
Less: Cost of goods sold	350500
Less: Underapplied overhead	21000
Gross Profit	268500