Question

[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 $520,000, and factory payroll cost in April is $365,000. Overhead costs incurred in April are: indirect materials, $51,000; indirect labor, $26,000; factory rent, $39,000; factory utilities, $21,000; and factory equipment depreciation, $56,000. The predetermined overhead rate is 50% of direct labor cost. Job 306 is sold for $675,000 cash in April. Costs of the three jobs worked on in April follow. Job 306 Job 307 Job 308 $ 27,000 21,000 10,500 $ 42,000 13,000 6,500 Balances on March 31 Direct materials Direct labor Applied overhead Costs during April Direct materials Direct labor Applied overhead 132,000 105,000 205,000 155,000 $ 115,000 101,000 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	$27,000.00	$42,000.00	$0.00	$69,000.00
Direct labor	$21,000.00	$13,000.00	$0.00	$34,000.00
Applied overhead (50% of direct labor)	$10,500.00	$6,500.00	$0.00	$17,000.00
Beginning Goods in Process	$58,500.00	$61,500.00	$0.00	$120,000.00
For April:
Direct material	$132,000.00	$205,000.00	$115,000.00	$452,000.00
Direct labor	$105,000.00	$155,000.00	$101,000.00	$361,000.00
Applied overhead (50% of direct labor)	$52,500.00	$77,500.00	$50,500.00	$180,500.00
Total Cost added in April	$289,500.00	$437,500.00	$266,500.00	$993,500.00
Total Costs (April 30)	$348,000.00	$499,000.00	$266,500.00	$1,113,500.00
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	$520,000.00
	To Accounts Payable		$520,000.00
	(To record purchase of raw material)
b	Work In Process Dr	$452,000.00
	To Raw material inventory		$452,000.00
	(To record raw material used in production)
c	Work In Process Dr	$361,000.00
	To Cash		$361,000.00
	(To record direct labor payment and assigment to production)
d	Factory overhead Dr	$26,000.00
	To Cash		$26,000.00
	(To record Indirect labor payment and assigment to factory overhead)
e	Work In Process Dr	$180,500.00
	To Factory Overhead		$180,500.00
	(To apply overhead to production)
f1	Factory Overhead Dr	$51,000.00
	To Raw material inventory		$51,000.00
	(To record indirect material used)
f2	Factory Overhead Dr	$39,000.00
	To Cash		$39,000.00
	(To record factory rent)
f3	Factory Overhead Dr	$21,000.00
	To Cash		$21,000.00
	(To record factory utilities)
f4	Factory Overhead Dr	$56,000.00
	To Accumulated Depreciation		$56,000.00
	(To record factory depreciation)
g	Finished goods inventory Dr	$847,000.00
	To Work In Process		$847,000.00
	(Being completed jobs transferred to finished goods)
h	Cost of goods sold Dr	$348,000.00
	To Finished goods inventory		$348,000.00
	(To record cost of goods sold for Job 306)
i	Cash Dr	$675,000.00
	To Sales Revenue		$675,000.00
	(To record sales of Job 306)
j	Cost of goods sold Dr	$12,500.00
	To Factory Overhead		$12,500.00
	(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	$452,000.00
Direct labor	$361,000.00
Applied overhead (50% of DL Cost)	$180,500.00
Total manufacturing costs	$993,500.00
Add: Beginning WIP	$120,000.00
Total cost of work in process	$1,113,500.00
Less: Ending WIP	$266,500.00
Cost of goods manufactured	$847,000.00

Solution 4.1:

Underapplied overhead = ($51,000 + $26,000 + $39,000 + $21,000 + $56,000) - $180,500 = $12,500

Adjusted cost of goods sold = $348,000 + $12,500 = $360,500

Gross profit  = Sales - COGS = $675,000 - $360,500 = $314,500

Solution 4.2:

Inventories - April 30
Particulars	Amount
Raw material inventory ($87,000 + $520,000 - $452,000 - $51,000)	$104,000.00
Work In Process Inventory	$266,500.00
Finished goods inventory	$499,000.00
Total	$869,500.00