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 $80,000. Raw materials purchases in April are $500,000, and factory payroll cost in April is $363.000. Overhead costs incurred in Aprilare: indirect materials, $50,000; Indirect labor $23,000; factory rent, $32,000; factory utilities, $19,000; and factory equipment depreciation, $51,000. The predetermined overhead rate is 50% of direct labor cost. Job 306 is sold for $635,000 cash in April. Costs of the three jobs worked on in April follow Job 386 Job 307 Job $ 29,000 20,000 10,000 $ 35,000 18,000 9,000 Balances on March 31 Direct materials Direct labor Applied overhead Costs during April Direct materials Direct labor Applied overhead Status on April 30 135,000 85,000 $100,000 105,000 220,000 150,000 7 Finished (unsold) Finished (sold) I n process Problem 15-1A Part 2 a. Materials purchases (on credit). b. Direct materials used in production. c. Direct labor paid and assigned to Work in Process Inventory. d. Indirect labor paid and assigned to Factory Overhead. e. Overhead costs applied to Work in Process Inventory 1. Actual overhead costs incurred, including indirect materials. (Factory rent and utilities are paid in cash.) 9. Transfer of Jobs 306 and 307 to Finished Goods Inventory. h. Cost of goods sold for Job 306. I. Revenue from the sale of Job 306. I Assianment of any underapplied or overapolied overhead to the Cost of Goods Sold account. The amount is not material)

Answer 1

2)

Date	Account titles and explanation	Debit	Credit
a	Raw materials inventory	$500000
	Account payable		$500000
	(To record raw materials purchased)
b	Work in process inventory	$455000
	Raw materials inventory		$455000
	(To record direct materials used)
c	Work in process inventory	$340000
	Cash		$340000
	(To record direct labor paid and assigned to work in process)
d	Factory overhead	$23000
	Cash		$23000
	(To record indirect labor paid and assigned to work in process)
e	Work in process inventory	$170000
	Factory overhead		$170000
	(To record overhead cost applied)
f(1)	Factory overhead	$50000
	Raw materials inventory		$50000
	(To record indirect materials used)
f(2)	Factory overhead	$19000
	Cash		$19000
	(To record factory utilities paid)
f(3)	Factory overhead	$32000
	Cash		$32000
	(To record factory rent paid)
f(4)	Factory overhead	$51000
	Accumulated depreciation- factory equipment		$51000
	(To record depreciation)
g	Finished goods inventory (321500+507000)	$828500
	Work in process inventory		$828500
	(To record Job 306 and 307 transferred)
h	Cost of goods sold	$321500
	Finished goods inventory		$321500
	(To record cost of goods sold for Job 306)
i	Cash	$635000
	Sales		$635000
	(To record sales of Job 306)
j	Cost of goods sold	$5000
	Factory overhead		$5000
	(To record underapplied overhead)

Overapplied or underapplied overhead= Manufacturing overhead applied-Actual manufacturing costs

= $170000-175000= $5000 under applied

Actual manufacturing costs= $50000+23000+32000+19000+51000= $175000

3)

MARCELINO COMPANY
Schedule of Cost of Goods Manufactured
For Month Ended April 30
Direct materials used	$455000
Direct labor	340000
Manufacturing overhead applied	170000
Total manufacturing costs	965000
Add: Beginning work in process	121000
Total cost of work in process	1086000
Less: Ending work in process	-257500
Cost of goods manufactured	$828500

Ending work in process= Job 308= $257500

4.1)

Sales	$635000
Less: Cost of goods sold	-326500
Gross profit	$308500

Cost of goods sold= Unadjusted cost of goods sold+Underapplied overhead

= $321500+5000= $326500

4.2)

Inventories
Raw materials	$75000
Work in process	257500
Finished goods	507000
Total inventories	$839500

Raw materials= Beginning raw materials inventory+Purchases-Indirect materials-Direct materials

= $80000+500000-50000-455000= $75000

Work in process= Job 308= $257500

Finished goods= Job 307= $507000