Question

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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 $88,000. Raw materials purchases in April are $600,000, and factory payroll cost in April is $365,000. Overhead costs incurred in April are: indirect materials, $52,000; indirect labor, $27,000; factory rent, $31,000; factory utilities, $21,000; and factory equipment depreciation, $51,000. The predetermined overhead rate is 50% of direct labor cost. Job 306 is sold for $645,000 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			20,000				17,000
Applied overhead			10,000				8,500
Costs during April
Direct materials			136,000				200,000			$	110,000
Direct labor			101,000				150,000				100,000
Applied overhead			?				?				?
Status on April 30	Finished (sold)				Finished (unsold)					In process

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.

Answer 1

	In the books of Macrelino's
	Date	Account Title & Explanation		Debit	Credit
				Amount in $	Amount in $
	a	Raw Material Inventory		600000
			Accounts payable/Cash		600000
		To record the purchase of Raw Material
	b	Work In Process Inventory		446000
			Raw Material Inventory		446000
		To record the direct materials used in production
	c	Direct Labor		351000
			Cash		351000
		Work In Process Inventory		351000
			Direct labor		351000
		To record the payment and assignment of direct labor
	d	Indirect labor		27000
			Cash		27000
		Factory Overhead		27000
			Indirect labor		27000
		To record the payment & assignment of indirect labor
	e	Work in process		175500
			Factory Overhead		175500
		To record the applied overhead to work in process
	f	Factory Overhead		155000
			Raw Material Inventory		52000
			Factory rent		31000
			Utilities		21000
			Factory equipement depreciation		51000
		Factory rent		31000
		Utilities		27000
			Cash		58000
		To record the actual overhead costs incurred
	g	Finished goods inventory		840000
			Work In Process Inventory		840000
		To record the transfer to finished goods inventory
	h	Cost of goods sold		346500
			Finished goods Inventory		346500
		To record the cost of goods sold
	i	Accounts Receivabl/Cash		645000
			Revenue from sales		645000
	j	Cost of goods sold		6500
			Factory Overhead		6500
		To record the underapplied overhead to cost of goods sold