Question

Marcelino Co.'s March 31 inventory of raw materials is $88,000. Raw materials purchases in April are $580,000, and factory payroll cost in April is $383,000. Overhead costs incurred in April are: indirect materials, $60,000; indirect labor, $28,000; factory rent, $34.000; factory utilities, $19,000; and factory equipment depreciation, $60,000. 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. 

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.

f. Actual overhead cost incurred, including indirect materials. (Factory rent and utilities are paid in cash.)

g. 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.

j. Assignment of any underapplied or overapplied overhead to the Cost of Goods Sold account. (The amount is not material.)

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

Answer 1

			Job 306	Job 307	Job 308	April
1)						total
From March
Direct materials			27,000	44,000	0	71,000
Direct labor			24,000	16,000	0	40,000
applied overhead			12,000	8,000	0	20,000
Beginning goods in process			63,000	68,000	0	131,000
For April
Direct materials			138,000	215,000	105,000	458,000
Direct labor			100,000	150,000	105,000	355,000
applied overhead			50000	75000	52500	177,500
Total costs added in April			288,000	440,000	262,500	990,500
total costs (April 30)			351,000	508,000	262,500	1,121,500
Satus on april 30			fin(sold)	fin(unsold)	in process
April costs included in :			COGS	finished	WIP
				goods
				inventory
2)	TR	General journal				Debit	Credit
	a.	Raw materials inventory				580,000
		Accounts payable					580,000
	b.	Work in process inventory				458,000
		Raw materials inventory					458,000
	c.	Work in process inventory				355,000
		Cash					355,000
	d.	Factory overhead				28,000
		cash					28,000
	e.	Work in process inventory				177,500
		Factory overhead					177,500
	f.	Factory overhead				173,000
		Raw materials inventory					60,000
		Cash					53,000
		Accumulated Depreciation					60,000
	g.	finished goods inventory				859,000
		Work in process inventory					859,000
	h.	Cost of goods sold				351,000
		finished goods inventory					351,000
	i.	Cash				635,000
		sales					635,000
	j.	cost of goods sold				23,500
		Factory overhead					23,500

Working notes
	Actual overhead
	indirect material			60,000
	indirect labor			28,000
	depreciation			60,000
	Factory rent			34,000
	factory utilities			19,000
	total			201,000
	overhead applied			177,500
	under applied overhead			23,500