Question

Required information [The following information applies to the questions displayed below.] Marcelino Co.'s March 31 inventory of raw materials is $88,000. Raw materials purchases in April are $530,000, and factory payroll cost in April is $388,000. Overhead costs incurred in April are: indirect materials, $54,000; indirect labor, $30,000; factory rent, $31,000; factory utilities, $19,000; and factory equipment depreciation, $56,000. The predetermined overhead rate is 50% of direct labor cost. Job 306 is sold for $630,000 cash in April. Costs of the three jobs worked on in April follow. Job 306 Job 307 Job 308 $ 29,000 25,000 12,500 $ 35,000 17,000 8,500 Balances on March 31 Direct materials Direct labor Applied overhead Costs during April Direct materials Direct labor Applied overhead Status on April 30 135,000 103,000 220,000 152,000 $ 105,000 103,000 Finished (sold) Finished (unsold) In process 4-a. Compute gross profit for April. 4-b. Show how to present the inventories on the April 30 balance sheet.

Answer 1

Solution 4a:

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	$29,000.00	$35,000.00	$0.00	$64,000.00
Direct labor	$25,000.00	$17,000.00	$0.00	$42,000.00
Applied overhead (50% of direct labor)	$12,500.00	$8,500.00	$0.00	$21,000.00
Beginning Goods in Process	$66,500.00	$60,500.00	$0.00	$1,27,000.00
For April:
Direct material	$1,35,000.00	$2,20,000.00	$1,05,000.00	$4,60,000.00
Direct labor	$1,03,000.00	$1,52,000.00	$1,03,000.00	$3,58,000.00
Applied overhead (50% of direct labor)	$51,500.00	$76,000.00	$51,500.00	$1,79,000.00
Total Cost added in April	$2,89,500.00	$4,48,000.00	$2,59,500.00	$9,97,000.00
Total Costs (April 30)	$3,56,000.00	$5,08,500.00	$2,59,500.00	$11,24,000.00
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

Actual Overhead = 54000+30000+31000+19000+56000 = $190,000

Applied overhead = $179,000

Under applied overhead = $190000 - $179000 = $11,000

Gross Profit = Sales of Job 306 - Cost of Job 306 - underapplied overhead

= $630000 - $356000 - $11000 = $263,000

Solution 4b:

Inventories - April 30
Particulars	Amount
Raw material inventory ($88,000 + $530,000 - $460,000 - $54,000)	$1,04,000.00
Work In Process Inventory (Job 308)	$2,59,500.00
Finished goods inventory (Job 307)	$5,08,500.00
Total	$8,72,000.00