Question

Problem 15-1A Production costs computed and recorded; reports prepared LO C2, P1, P2, P3, P4 [The following information applies to the questions displayed below.] Marcelino Co.'s March 31 inventory of raw materials is $87,000. Raw materials purchases in April are $530,000, and factory payroll cost in April is $385,000. Overhead costs incurred in April are: indirect materials, $54,000; indirect labor, $25,000; factory rent, $35,000; factory utilities, $23,000; 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 $ 40,000 19,000 9,500 Balances on March 31 Direct materials Direct labor Applied overhead Costs during April Direct materials Direct labor Applied overhead 137,000 104,000 ? 210,000 154,000 ? $ 115,000 102,000 ? Status on April 30 Finished (sold) Finished (unsold) In process

Answer 1

Solution 1:
Computation of production cost incurred in april and total cost assigned to each job
Particulars	Job 306	Job 307	Job 308	Total
From March:
Direct material	$28,000.00	$40,000.00	$0.00	$68,000.00
Direct labor	$23,000.00	$19,000.00	$0.00	$42,000.00
Applied overhead (50% of direct labor)	$11,500.00	$9,500.00	$0.00	$21,000.00
Beginning Goods in Process	$62,500.00	$68,500.00	$0.00	$131,000.00
For April:
Direct material	$137,000.00	$210,000.00	$115,000.00	$462,000.00
Direct labor	$104,000.00	$154,000.00	$102,000.00	$360,000.00
Applied overhead (50% of direct labor)	$52,000.00	$77,000.00	$51,000.00	$180,000.00
Total Cost added in April	$293,000.00	$441,000.00	$268,000.00	$1,002,000.00
Total Costs (April 30)	$355,500.00	$509,500.00	$268,000.00	$1,133,000.00
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

Solution 2:
Journal Entries - Marcelino Co
Event	Particulars	Debit	Credit
a	Raw material inventory Dr	$530,000.00
	To Accounts Payable		$530,000.00
	(To record purchase of raw material)
b	Work In Process Dr	$462,000.00
	To Raw material inventory		$462,000.00
	(To record raw material used in production)
c	Work In Process Dr	$360,000.00
	To Cash		$360,000.00
	(To record direct labor payment and assigment to production)
d	Factory overhead Dr	$25,000.00
	To Cash		$25,000.00
	(To record Indirect labor payment and assigment to factory overhead)
e	Work In Process Dr	$180,000.00
	To Factory Overhead		$180,000.00
	(To apply overhead to production)
f1	Factory Overhead Dr	$54,000.00
	To Raw material inventory		$54,000.00
	(To record indirect material used)
f2	Factory Overhead Dr	$35,000.00
	To Cash		$35,000.00
	(To record factory rent)
f3	Factory Overhead Dr	$23,000.00
	To Cash		$23,000.00
	(To record factory utilities)
f4	Factory Overhead Dr	$59,000.00
	To Accumulated Depreciation		$59,000.00
	(To record factory depreciation)
g	Finished goods inventory Dr	$865,000.00
	To Work In Process		$865,000.00
	(Being completed jobs transferred to finished goods)
h	Cost of goods sold Dr	$355,500.00
	To Finished goods inventory		$355,500.00
	(To record cost of goods sold for Job 306)
i	Cash Dr	$685,000.00
	To Sales Revenue		$685,000.00
	(To record sales of Job 306)
j	Cost of goods sold Dr	$16,000.00
	To Factory Overhead		$16,000.00
	(To close underapplied overhead to COGS)

Solution 3:
Marcelino company
Schedule of cost of goods manufactured
For the month ended April 30
Particulars	Amount
Direct material	$462,000.00
Direct labor	$360,000.00
Applied overhead (50% of DL Cost)	$180,000.00
Total manufacturing costs	$1,002,000.00
Add: Beginning WIP	$131,000.00
Total cost of work in process	$1,133,000.00
Less: Ending WIP	$268,000.00
Cost of goods manufactured	$865,000.00

Solution 4a: Adjusted cost of goods sold = Unadjusted cost of goods sold + Underapplied overhead = $355,500 + $16,000 = $371,500 Gross profit = Sales Revenue - Cost of goods sold =$685,000 - $371,500 = $313,500

Solution 4b:
Inventories - April 30
Particulars	Amount
Raw material inventory ($87,000 + $530,000 - $462,000 - $54,000)	$101,000.00
Work In Process Inventory	$268,000.00
Finished goods inventory	$509,500.00
Total	$878,500.00