Question

Marcelino Co.'s March 31 inventory of raw materials is $81,000. Raw materials purchases in April are $530,000, and factory payroll cost in April is $380,000. Overhead costs incurred in April are: indirect materials, $51,000; indirect labor, $22,000; factory rent, $40,000; factory utilities, $21,000, and factory equipment depreciation, $60,000. The predetermined overhead rate is 50% of direct labor cost. Job 306 is sold for $660,000 cash in April. Costs of the three jobs worked on in April follow. Job 306 Job 307 Job 308 $ 27,000 23,000 11,500 $ 39,000 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 30 136,000 104,000 215,000 151,000 $120,000 103,000 Finished (sold) Finished (unsold) In process 4.1 Compute gross profit for April. Gross Profit 4.2 Show how to present the inventories on the April 30 balance sheet. 53,000 Inventories Raw materials $ Work in process Finished goods Total inventories $ 53,000

Answer 1

4.1
Gross Profit	291500
4.2
Inventories
Raw materials	89000	=81000+530000-471000-51000
Work in Process	274500
Finished goods	503000
Total inventories	866500
Workings:
	Job 306	Job 307	Job 308	April Total
From March
Direct Materials	27000	39000		66000
Direct Labor	23000	15000		38000
Applied overhead	11500	7500		19000
Beginning goods in process	61500	61500	0	123000
For April
Direct Materials	136000	215000	120000	471000
Direct Labor	104000	151000	103000	358000
Applied overhead	52000	75500	51500	179000
Total costs added in April	292000	441500	274500	1008000
Total costs (April 30)	353500	503000	274500	1131000
Status on April 30	Finished (sold)	Finished (unsold)	In process
April 30 cost included in:	Cost of goods sold	Finished goods inventory	Goods in process inventory
	Actual factory overhead:
	Indirect materials	51000
	Indirect labor	22000
	Factory rent	40000
	Factory utilities	21000
	Factory depreciation equipment	60000
	Actual factory overhead	194000
	Applied overhead	179000
	Underapplied overhead	15000
	Sales	660000
	Less: Cost of goods sold	353500
	Less: Underapplied overhead	15000
	Gross Profit	291500