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Marcelino Co.'s March 31 inventory of raw materials is $85,000. Raw materials purchases in April are $510,000, and factory payroll cost in April is $377,000. Overhead costs incurred in April are: indirect materials, $51,000; indirect labor, $22,000; factory rent, $34,000; factory utilities, $23,000; and factory equipment depreciation, $57,000. 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		$	27,000			$	40,000
Direct labor			23,000				19,000
Applied overhead			11,500				9,500
Costs during April
Direct materials			136,000				205,000			$	120,000
Direct labor			102,000				151,000				102,000
Applied overhead			?				?				?
Status on April 30	Finished (sold)				Finished (unsold)					In process

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).

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.

4-a. Compute gross profit for April.
4-b. Show how to present the inventories on the April 30 balance sheet.

Answer 1

	Job 306	Job 307	Job 308	Total
From March
Direct Material	$                  27,000	$                       40,000		$          67,000
Direct Labor	$                  23,000	$                       19,000		$          42,000
Applied Overhead	$                  11,500	$                         9,500		$          21,000
Beginning Goods in Process	$                  61,500	$                       68,500		$        130,000
For April
Direct Material	$                136,000	$                    205,000	$         120,000	$        461,000
Direct Labor	$                102,000	$                    151,000	$         102,000	$        355,000
Applied Overhead	$                  51,000	$                       75,500	$           51,000	$        177,500
Total Costs added in April	$                289,000	$                    431,500	$         273,000	$        993,500
Total Costs	$                350,500	$                    500,000	$         273,000	$     1,123,500
Status on April 30	Finished (Sold)	Finished (UnSold)	In Process
April 30 cost included in	Cost of Goods Sold	Finished Goods Inventory	Work in Process Inventory

2.

Account Titles	Debit	Credit
Raw Material Inventory	$          510,000
Accounts Payable		$            510,000
Work in Process Inventory	$          461,000
Raw Material Inventory		$            461,000
Factory Payroll Costs	$          377,000
Cash		$            377,000
Work in Process Inventory	$          355,000
Factory Payroll Costs		$            355,000
Manufacturing Overhead	$            22,000
Factory Payroll Costs		$              22,000
Work in Process Inventory	$          177,500
Manufacturing Overhead		$            177,500
Manufacturing Overhead	$          165,000
Raw Material Inventory		$              51,000
Cash		$              57,000
Accumulated Depreciation		$              57,000
Finished Goods Inventory	$          850,500
Work in Process Inventory		$            850,500
Cost of Goods Sold	$          350,500
Finished Goods Inventory		$            350,500
Accounts Receivable	$          640,000
Sales Revenue		$            640,000
Cost of Goods Sold	$              9,500
Manufacturing Overhead		$                9,500

3.

Cost of Goods Manufactured
Direct Material	$                461,000
Direct Labor	$                355,000
Applied Overhead	$                177,500
Total Manufacturing Costs	$                993,500
Add Beginning Work in Process	$                130,000
Total cost of work in process	$             1,123,500
Less Ending Work in process	$                273,000
Cost of Goods Manufactured	$                850,500

4a.

Sales	$     640,000
Cost of Goods Sold	$     360,000
Gross Profit	$     280,000

4b.

Raw Material	$            83,000	=85000+510000-461000-51000
Work in Process	$          273,000
Finished Goods Inventory	$          500,000
Total Inventory	$          856,000