Question

Marcelino Co.'s March 31 inventory of raw materials is $84,000. Raw materials purchases in April are $570,000, and factory payroll cost in April is $384,000. Overhead costs incurred in April are: indirect materials, $58,000; indirect labor, $29,000; factory rent, $40,000; factory utilities, $21,000; and factory equipment depreciation, $60,000. The predetermined overhead rate is 50% of direct labor cost. Job 306 is sold for $695,000 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			$	37,000
Direct labor			22,000				16,000
Applied overhead			11,000				8,000
Costs during April
Direct materials			130,000				215,000			$	105,000
Direct labor			104,000				151,000				100,000
Applied overhead			?				?				?
Status on April 30	Finished (sold)				Finished (unsold)					In process

Record the entry for Materials purchases (on credit).

Compute gross profit for April.

	Gross Profit

Answer 1

Solution

Cost of three jobs worked on in April –

	Job 306	Job 307	Job 308	April Total
From March
Direct Materials	$26,000	$37,000		$63,000
Direct Labor	$22,000	$16,000		$38,000
Applied Overhead	$11,000	$8,000		$19,000
Beginning goods in progress	$59,000	$61,000		$120,000
For April
Direct Materials	$130,000	$215,000	$105,000	$450,000
Direct Labor	$104,000	$151,000	$100,000	$355,000
Applied Overhead	$52,000	$75,500	$50,000	$177,500
Total costs added in April	$286,000	$441,500	$255,000	$982,500
Total costs (April 30)	$345,000	$502,500	$255,000	$1,102,500
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

Entry for Materials purchased on credit –

Date	Account Titles and Explanation	Ref. No.	Debit	Credit
	Raw Materials Inventory		$570,000
	Accounts Payable			$570,000
	(To record cost of raw materials purchased on credit)

Computation of gross profit for April:

Gross profit = sale of Job 306 – cost of goods sold Job 306

Sale = $695,000

COGS = $345,000

Gross Profit = 695,000 – 345,000 = $350,000