Question

Marcelino Co.'s March 31 inventory of raw materials is $90,000. Raw materials purchases in April are $510,000, and factory payroll cost in April is $381,000. Overhead costs incurred in April are: indirect materials, $53,000; indirect labor, $25.000; factory rent, $36,000; factory utilities, $24,000, and factory equipment depreciation, $55,000. 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 $ 28,000 24,000 12,000 $ 37,000 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 30 133,000 100,000 215,000 152,000 $110,000 104,000 Finished Finished (sold) (unsold) In process 4.1 Compute gross profit for April. Gross Profit

Answer 1

Solution 4.1 Gross profit in April For Job 306 Sales $655,000 I Cost of goods sold Gross profit $ $347,000 $308,000 Solution 4.2 Inventories Raw materials $89,000 Work in process $266,000 Finished goods $505,200 Total inventories $869,000

Working note 1.1 Job 306 Job 307 Job 308 Balances on March 31 Direct materials $28,000 $37,000 Direct labor $24,000 $15,000 Applied overhead $12,000 $7,500 Costs during April Direct materials $133,000 $215,000 $110,000 Direct labor $100,000 $152,000 $104,000 Applied overhead $50,000 $76,000 $52,000 Total cost $ $347,000 $502,500 $266,000 FGT WIP COGS

Working note 1.2 Raw materials Balance on March 31 $90,000 Add: Purchases $510,000 $600,000 Total raw materials available Less: Direct materials used ($458,000) ($53,000) Less: Indirect materials used Balance on April 30 $89,000