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Marcelino Co.'s March 31 inventory of raw materials is $82,000. Raw materials purchases in April are $500,000, and factory payroll cost in April is $387,000. Overhead costs incurred in April are: indirect materials, $58,000; indirect labor, $29,000; factory rent, $36,000; factory utilities, $19,000; and factory equipment depreciation, $52,000. The predetermined overhead rate is 50% of direct labor cost. Job 306 is sold for $655,000 cash in April. Costs of the three jobs worked on in April follow.

	Job 306				Job 307				Job 308
Balances on March 31
Direct materials		$	26,000			$	41,000
Direct labor			23,000				18,000
Applied overhead			11,500				9,000
Costs during April
Direct materials			139,000				200,000			$	110,000
Direct labor			102,000				153,000				103,000
Applied overhead			?				?				?
Status on April 30	Finished (sold)				Finished (unsold)					In process

1. Materials purchases (on credit).
2. Direct materials used in production.
3. Direct labor paid and assigned to Work in Process Inventory.
4. Indirect labor paid and assigned to Factory Overhead.
5. Overhead costs applied to Work in Process Inventory.
6. Actual overhead costs incurred, including indirect materials. (Factory rent and utilities are paid in cash.)
7. Transfer of Jobs 306 and 307 to Finished Goods Inventory.
8. Cost of goods sold for Job 306.
9. Revenue from the sale of Job 306.
10. Assignment of any underapplied or overapplied overhead to the Cost of Goods Sold account. (The amount is not material.)

2. Prepare journal entries for the month of April to record the above transactions.

Answer 1

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 ($139000+200000+110000)	$449000
	Raw materials inventory		$449000
	(To record direct materials used)
c	Work in process inventory ($102000+153000+103000)	$358000
	Cash		$358000
	(To record direct labor paid)
d	Factory overhead	$29000
	Cash		$29000
	(To record indirect labor paid)
e	Work in process inventory ($358000*50%)	$179000
	Factory overhead		$179000
	(To record overhead cost applied)
f(1)	Factory overhead	$58000
	Raw materials inventory		$58000
	(To record indirect materials used)
f(2)	Factory overhead	$36000
	Cash		$36000
	(To record factory rent paid)
f(3)	Factory overhead	$19000
	Cash		$19000
	(To record factory utilities paid)
f(4)	Factory overhead	$52000
	Accumulated depreciation- factory equipment		$52000
	(To record depreciation)
g	Finished goods inventory	$850000
	Work in process inventory		$850000
	(To record Job 306 and 307 transferred)
h	Cost of goods sold	$352500
	Finished goods inventory		$352500
	(To record cost of goods sold for Job 306)
i	Cash	$655000
	Sales revenue		$655000
	(To record sales of Job 306)
j	Cost of goods sold	$15000
	Factory overhead		$15000
	(To record underapplied overhead)

Finished goods= Job 306+Job 307

Job 306= Direct materials+Direct labor+Manufacturing overhead

= $26000+139000+23000+102000+11500+(102000*50%)= $352500

Job 307= $41000+200000+18000+153000+9000+(153000*50%)= $497500

Finished goods= $352500+497500= $850000

Cost of goods sold for Job 306= Direct materials+Direct labor+Manufacturing overhead

= $26000+139000+23000+102000+11500+(102000*50%)= $352500

Calculation of overapplied or underapplied

Actual overhead= Indirect materials+Indirect labor+Factory rent+Factory utilities+Factory equipment depreciation

= $58000+29000+36000+19000+52000= $194000

Overapplied or underapplied= Actual overhead-Applied overhead

= $194000-179000= $15000 underapplied