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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 $387,000. Overhead costs incurred in April are: indirect materials, $50,000; indirect labor, $26,000; factory rent, $35,000; factory utilities, $21,000; and factory equipment depreciation, $56,000. The predetermined overhead rate is 50% of direct labor cost. Job 306 is sold for $650,000 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		$	32,000			$	40,000
Direct labor			22,000				15,000
Applied overhead			11,000				7,500
Costs during April
Direct materials			139,000				210,000			$	115,000
Direct labor			105,000				154,000				102,000
Applied overhead			?				?				?
Status on April 30	Finished (sold)				Finished (unsold)					In process

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

Answer 1

Job Cost sheet
			Job 306	Job 307	Job 308	Total
Beginning WIP		65000	62500		127500
Add: Current cost
Material			139000	210000	115000	464000
Labour			105000	154000	102000	361000
Overheads		52500	77000	51000	180500
Total cost			361500	503500	268000	1133000
Status			SOLD	UNSOLD	IN PROCESS
Under/Over-applied Overheads:
Overheads incurred:
Indrect material		50,000
Indirect labour		26,000
Factory rent		35,000
Fctory utilities		21,000
Factory equipment dep	56,000
Total Overheads incurred		1,88,000
Overheads applied			180500
Under-applied Overheads		7500
Adjusted Cost of Goods sold:
Cost of goods sold			361500
Add: Under-applied overheads		7500
Adjusted Cost of Goods sold:		369000
Gross Profit:
Sales revenue			6,50,000
Less: Adjusted cost of goods sold	3,69,000
Gross Profit:			2,81,000
Raw material Inventory:
Beginning inventory of RM	85000
Add: Purchases		510000
Total material available	595000
Less: Used during the year	464000
Ending inventory of RM	131000