Question

Marcelino Co.'s March 31 inventory of raw materials is $80,000. Raw materials purchases in April are $500,000, and factory payroll cost in April is $363,000. Overhead costs incurred in April are: indirect materials, $50,000; indirect labor, $23,000; factory rent, $32,000; factory utilities, $19,000; and factory equipment depreciation, $51,000. 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			$	35,000
Direct labor			20,000				18,000
Applied overhead			10,000				9,000
Costs during April
Direct materials			135,000				220,000			$	100,000
Direct labor			85,000				150,000				105,000
Applied overhead			?				?				?
Status on April 30	Finished (sold)				Finished (unsold)					In process compute gross profit for April Show how to present the inventories on the April 30 balance sheet.

Answer 1

Gross Profit	308500
Inventories
Raw materials	75000
Goods in process	257500
Finished goods	507000
Total inventories	839500
Workings:
	Job 306	Job 307	Job 308	April Total
From March
Direct Materials	29000	35000		64000
Direct Labor	20000	18000		38000
Applied overhead	10000	9000		19000
Beginning goods in process	59000	62000	0	121000
For April
Direct Materials	135000	220000	100000	455000
Direct Labor	85000	150000	105000	340000
Applied overhead	42500	75000	52500	170000
Total costs added in April	262500	445000	257500	965000
Total costs (April 30)	321500	507000	257500	1086000
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
	Workings:
	Actual factory overhead:
	Indirect materials	50000
	Indirect labor	23000
	Factory rent	32000
	Factory utilities	19000
	Factory depreciation equipment	51000
	Actual factory overhead	175000
	Applied overhead	170000
	Underapplied overhead	5000
	Sales	635000
	Less: Cost of goods sold	326500	=321500+5000
	Gross Profit	308500
	Raw materials, beginning	80000
	Add: Raw materials purchases	500000
	Less: Direct materials used	-455000
	Less: Indirect materials used	-50000
	Raw materials, ending	75000