Question

Required information Problem 02.1A Production costs computed and recorded; reports prepared LO P1, P2, P3, P4 The following information applies to the questions displayed below] Marcelino Co.'s March 31 Inventory of raw materials is $82,000. Raw materials purchases in April are $580,000, and factory payroll cost in April is $377.000. Overhead costs incurred in April are: indirect materials, $59,000 indirect labor, $24.000 factory rent, $31.000; factory utilities, $22,000, and factory equipment depreciation, $57,000. 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 300 Job 307 Job 300 $ 26,000 20,00 10,000 $ 42,000 15,000 7,500 Balances on March 31 Direct materials Direct labor Applied overhead Costs during April Direct materials Direct labor Applied overhead Status on April 30 130,000 102,000 $110,000 101,000 215.000 150,000 7 Finished (unsold) Finished (sold) 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	$26,000.00	$42,000.00	$0.00	$68,000.00
Direct labor	$20,000.00	$15,000.00	$0.00	$35,000.00
Applied overhead (50% of direct labor)	$10,000.00	$7,500.00	$0.00	$17,500.00
Beginning Goods in Process	$56,000.00	$64,500.00	$0.00	$120,500.00
For April:
Direct material	$130,000.00	$215,000.00	$110,000.00	$455,000.00
Direct labor	$102,000.00	$150,000.00	$101,000.00	$353,000.00
Applied overhead (50% of direct labor)	$51,000.00	$75,000.00	$50,500.00	$176,500.00
Total Cost added in April	$283,000.00	$440,000.00	$261,500.00	$984,500.00
Total Costs (April 30)	$339,000.00	$504,500.00	$261,500.00	$1,105,000.00
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	$580,000.00
	To Accounts Payable		$580,000.00
	(To record purchase of raw material)
b	Work In Process Dr	$455,000.00
	To Raw material inventory		$455,000.00
	(To record raw material used in production)
c	Work In Process Dr	$353,000.00
	To Cash		$353,000.00
	(To record direct labor payment and assigment to production)
d	Factory overhead Dr	$24,000.00
	To Cash		$24,000.00
	(To record Indirect labor payment and assigment to factory overhead)
e	Work In Process Dr	$176,500.00
	To Factory Overhead		$176,500.00
	(To apply overhead to production)
f1	Factory Overhead Dr	$59,000.00
	To Raw material inventory		$59,000.00
	(To record indirect material used)
f2	Factory Overhead Dr	$31,000.00
	To Cash		$31,000.00
	(To record factory rent)
f3	Factory Overhead Dr	$22,000.00
	To Cash		$22,000.00
	(To record factory utilities)
f4	Factory Overhead Dr	$57,000.00
	To Accumulated Depreciation		$57,000.00
	(To record factory depreciation)
g	Finished goods inventory Dr	$843,500.00
	To Work In Process		$843,500.00
	(Being completed jobs transferred to finished goods)
h	Cost of goods sold Dr	$339,000.00
	To Finished goods inventory		$339,000.00
	(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	$16,500.00
	To Factory Overhead		$16,500.00
	(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	$455,000.00
Direct labor	$353,000.00
Applied overhead (50% of DL Cost)	$176,500.00
Total manufacturing costs	$984,500.00
Add: Beginning WIP	$120,500.00
Total cost of work in process	$1,105,000.00
Less: Ending WIP	$261,500.00
Cost of goods manufactured	$843,500.00

Solution 4a: Adjusted cost of goods sold = Unadjusted cost of goods sold + Underapplied overhead = $339,000 + $16,500 = $355,500 Gross profit = Sales Revenue - Cost of goods sold =$685,000 - $355,500 = $329,500