Question

Marcelino Co.'s March 31 inventory of raw materials is $89,000. Raw materials purchases in April are $580,000, and factory payroll cost in April is $385,000. Overhead costs incurred in April are: indirect materials, $53,000; indirect labor, $25,000; factory rent, $36,000; factory utilities, $24,000; and factory equipment depreciation, $58,000. The predetermined overhead rate is 50% of direct labor cost. Job 306 is sold for $675,000 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		$	26,000			$	45,000
Direct labor			25,000				14,000
Applied overhead			12,500				7,000
Costs during April
Direct materials			134,000				215,000			$	105,000
Direct labor			103,000				153,000				104,000
Applied overhead			?				?				?
Status on April 30	Finished (sold)				Finished (unsold)					In process
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). 2. Prepare journal entries for the month of April to record the above transactions. Materials purchases (on credit). Direct materials used in production. Direct labor paid and assigned to Work in Process Inventory. Indirect labor paid and assigned to Factory Overhead. Overhead costs applied to Work in Process Inventory. Actual overhead costs incurred, including indirect materials. (Factory rent and utilities are paid in cash.) Transfer of Jobs 306 and 307 to Finished Goods Inventory. Cost of goods sold for Job 306. Revenue from the sale of Job 306. Assignment of any underapplied or overapplied overhead to the Cost of Goods Sold account. (The amount is not material.)

Answer 1

	Job 306	Job 307	Job 308	April Total
From March
Direct Materials	26000	45000		71000
Direct Labor	25000	14000		39000
Applied overhead	12500	7000		19500
Beginning goods in process	63500	66000	0	129500
For April
Direct Materials	134000	215000	105000	454000
Direct Labor	103000	153000	104000	360000
Applied overhead	51500	76500	52000	180000
Total costs added in April	288500	444500	261000	994000
Total costs (April 30)	352000	510500	261000	1123500
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
2
		Debit	Credit
1	Raw materias inventory	580000
	Accounts Payable		580000
2	Work in Process inventory	454000
	Raw materias inventory		454000
3	Work in Process inventory	360000
	Cash		360000
4	Factory overhead	25000
	Cash		25000
5	Work in Process inventory	180000
	Factory overhead		180000
6	Factory overhead	53000
	Raw materias inventory		53000
7	Factory overhead	24000
	Cash		24000
8	Factory overhead	58000
	Accumulated depreciation-factory equipment		58000
9	Factory overhead	36000
	Cash		36000
10	Finished goods inventory	862500
	Work in Process inventory		862500
11	Cost of goods sold	352000
	Finished goods inventory		352000
12	Cash	675000
	Sales		675000
13	Cost of goods sold	16000
	Factory overhead		16000
	Workings:
	Actual factory overhead:
	Indirect materials	53000
	Indirect labor	25000
	Factory rent	36000
	Factory utilities	24000
	Factory depreciation equipment	58000
	Actual factory overhead	196000
	Applied overhead	180000
	Underapplied overhead	16000