Question

Marcelino Co.'s March 31 inventory of raw materials is $90,000. Raw materials purchases in April are $550,000, and factory payroll cost in April is $383,000. Overhead costs incurred in April are: indirect materials, $53,000; indirect labor, $24,000; factory rent, $31,000; factory utilities, $19,000; and factory equipment depreciation, $59,000. The predetermined overhead rate is 50% of direct labor cost. Job 306 is sold for $685,000 cash in April. Costs of the three jobs worked on in April follow. Job 306 Job 307 Job 308 $ 28,000 23,000 11,500 $ 39,000 16,000 8,000 Balances on March 31 Direct materials Direct labor Applied overhead Costs during April Direct materials Direct labor Applied overhead Status on April 30 140,000 101,000 220,000 154,000 $105,000 104,000 In Finished (sold) Finished (unsold) 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). Job 306 Job 307 Job 308 April Total From March Direct Materials Direct Labor 39,000 16,000 28,000 23,000 11,500 62,500 $ 67,000 39,000 19,500 $ 125,500 8,000 63,000 Applied overhead Beginning goods in process For April Direct Materials Direct Labor Applied overhead Total costs added in April 140,000 101,000 220,000 154,000 105,000 104,000 465,000 359,000 241,000 374,000 209,000 824,000 Total costs (April 30) Status on April 30 Finished (sold) Finished (unsold) In process

Answer 1

1
	Job 306	Job 307	Job 308	April Total
From March
Direct Materials	28000	39000		67000
Direct Labor	23000	16000		39000
Applied overhead	11500	8000		19500
Beginning goods in process	62500	63000	0	125500
For April
Direct Materials	140000	220000	105000	465000
Direct Labor	101000	154000	104000	359000
Applied overhead	50500	77000	52000	179500
Total costs added in April	291500	451000	261000	1003500
Total costs (April 30)	354000	514000	261000	1129000
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 materials inventory	550000
	Accounts Payable		550000
2	Work in Process inventory	465000
	Raw materials inventory		465000
3	Work in Process inventory	359000
	Cash		359000
4	Factory overhead	24000
	Cash		24000
5	Work in Process inventory	179500
	Factory overhead		179500
6	Factory overhead	53000
	Raw materials inventory		53000
7	Factory overhead	19000
	Cash		19000
8	Factory overhead	59000
	Accumulated depreciation -factory equipment		59000
9	Factory overhead	31000
	Cash		31000
10	Finished goods inventory	868000
	Work in Process inventory		868000
11	Cost of goods sold	354000
	Finished goods inventory		354000
12	Cash	685000
	Sales		685000
13	Cost of goods sold	6500
	Factory overhead		6500
3
Schedule of cost of goods manufactured
For month ended April 30
Direct materials used	465000
Direct labor used	359000
Factory overhead applied	179500
Total manufacturing costs	1003500
Add: Work in Process, March 31	125500
Total cost of work in Process	1129000
Less: Work in Process, April 30	261000
Cost of goods manufactured	868000
4.1
Gross Profit	324500
4.2
Inventories
Raw materials	122000	=90000+550000-465000-53000
Work in Process	261000
Finished goods	514000
Total inventories	897000
Workings:
Actual factory overhead:
Indirect materials	53000
Indirect labor	24000
Factory rent	31000
Factory utilities	19000
Factory depreciation equipment	59000
Actual factory overhead	186000
Applied overhead	179500
Underapplied overhead	6500
Sales	685000
Less: Cost of goods sold	354000
Less: Underapplied overhead	6500
Gross Profit	324500