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 $86,000. Raw materials purchases in April are $570,000, and factory payroll cost in April is $380,000. Overhead costs incurred in April are: indirect materials, $54,000; indirect labor, $27,000; factory rent, $38,000; factory utilities, $20,000; and factory equipment depreciation, $60,000. 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			$	43,000
Direct labor			21,000				18,000
Applied overhead			10,500				9,000
Costs during April
Direct materials			140,000				200,000			$	115,000
Direct labor			101,000				151,000				101,000
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).

Job 306 Job 307 Job 308 April Total From March Direct Materials $29,000 $43,000 $72,000 Direct Labor 21,000 18,000 39,000 Applied overhead 10,500 9,000 19,500 Beginning goods in process For April Direct Materials 140,000 200,000 115,000 455,000 Direct Labor 101,000 151,000 101,000 353,000 Applied overhead Total costs added in April Total costs (April 30) Status on April 30 Finished (sold) Finished (unsold) In process April 30 cost included in:

Problem 15-1A Part 2

1. Materials purchases (on credit).
2. Direct materials used in production.
3. Direct labor paid and assigned to Work in Process Inventory.
4. Indirect labor paid and assigned to Factory Overhead.
5. Overhead costs applied to Work in Process Inventory.
6. Actual overhead costs incurred, including indirect materials. (Factory rent and utilities are paid in cash.)
7. Transfer of Jobs 306 and 307 to Finished Goods Inventory.
8. Cost of goods sold for Job 306.
9. Revenue from the sale of Job 306.
10. 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. Prepare a schedule of cost of goods manufactured.

	MARCELINO COMPANY Schedule of Cost of Goods Manufactured For Month Ended April 30 Total manufacturing costs Total cost of work in process Cost of goods manufactured

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 process Finished goods Total inventories

Answer 1

1)			Job 306	Job 307	Job 308	April
From March
Direct materials			29,000	43,000	0	72,000
Direct labor			21,000	18,000	0	39,000
applied overhead			10,500	9,000	0	19,500
Beginning goods in process			60,500	70,000	0	130,500
For April
Direct materials			140,000	200,000	115,000	455,000
Direct labor			101,000	151,000	101,000	353,000
applied overhead			50500	75500	50500	176,500
Total costs added in April			291,500	426,500	266,500	984,500
total costs (April 30)			352,000	496,500	266,500	1,115,000
Satus on april 30			fin(sold)	fin(unsold)	in process
April costs included in :			COGS	finished	WIP
				goods
				inventory
2)	TR	General journal				Debit	Credit
	a.	Raw materials inventory				570,000
		Accounts payable					570,000
	b.	Work in process inventory				455,000
		Raw materials inventory					455,000
	c.	Work in process inventory				353,000
		Cash					353,000
	d.	Factory overhead				27,000
		cash					27,000
	e.	Work in process inventory				176,500
		Factory overhead					176,500
	f.	Factory overhead				172,000
		Raw materials inventory					54,000
		Cash					58,000
		Accumulated Depreciation					60,000
	g.	finished goods inventory				848,500
		Work in process inventory					848,500
	h.	Cost of goods sold				352,000
		finished goods inventory					352,000
	i.	Cash				635,000
		sales					635,000
	j.	cost of goods sold				22,500
		Factory overhead					22,500
3)		Schedule of goods of goods manufactured
		direct materials used					455,000
		Direct labor used					353,000
		factory overhead applied					176,500
		total manufacturing costs					984,500
		Add:work in process March 31					130,500
		total cost of work in process					1,115,000
		less:work in process April 30					266,500
		cost of goods manufactured					848,500
4)		Gross profit
		sales				635,000
		less cost of goods sold				374,500
		Gross profit				260,500
5)		inventories
		Raw materials				147,000
		work in process				266,500
		finished goods				496,500
		total inventories				910,000