Question

Marcelino Co.'s March 31 inventory of raw materials is $89,000. Raw materials purchases in April are $540,000, and factory payroll cost in April is $390,000. Overhead costs incurred in April are: indirect materials, $53,000; indirect labor, $28,000; factory rent, $30,000; factory utilities, $22,000; and factory equipment depreciation, $60,000. The predetermined overhead rate is 50% of direct labor cost. Job 306 is sold for $690,000 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		$	29,000			$	43,000
Direct labor			23,000				17,000
Applied overhead			11,500				8,500
Costs during April
Direct materials			137,000				220,000			$	110,000
Direct labor			104,000				154,000				104,000
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

Solution gab 308 ) April Total Job 306 Job 387 the finished Cunsold) Computation of Total cost assigned to each os. Amont in Particulars from March Direct Materials 72000 43000 29000 Direct labor 23000 17 000 40000 Applied Overbread 11500 8500 20000 132000 Beginning goods in process 6350068520 for April 137000 Direct Materials 2 20000 467000 10000 104000 154000 104000 1 362000 Direct labour 77000 52000 14000 Applied Oveeluead (S07.20labortant 52000 266000 100000 293,000 45000 / Total cost added in April 1356570 266000 15795 Total Costs (April 3c) 11142000 finished April 30 finis Status on (sold) Cool finished Wook in April 30 cast of Goods fi Cast included un: I sold Goods Inreutons Process Journal Entries in the booke od Marcelino Co. for the month of April Journal Eur Debit | Credit 1 Raw Materials Inventory Ale ar 560,000 To Accomite Payable Ale (Being Material purchased on credit) 1. Wool in Bocess Inventory All go To Raw Material Inventor Ad Being sixet material used in production) Work in proces inveuton te Dr. 362000 To Cash ALL Being direct laboo paid & assigned to work in procen Inventor Inventory No. 540000 467000 467,000 362000 0

98000 28000 18700o 181000 53000 53000 52,000 52000 cath bopoo factory overhead Ale Dr. To cash Ale Being Indirect labor paid and I ( assigned to faciany ovesteeds (e) Work in process inventory Ale or to factory overhead Ale Being acrheads Cost applied to ] wook in proces inventory f(1) factory Overhead the Dr To raw materials Inventor A Being indirect materials applied to faltored fe ( bvestead f(2) factory overhead Ale Dr To Cash Alc ectory Reut & utilities ar f(3) factory overhead All Dr - TO Accumulated Deb-factory Being Dep on factory equipment to A appred to factory ovcehead All) finished Goods Inventory All of To work in proces inventory Being Job 306 8 307 transferred to finished Goods oools Sold Ale Do 70 Awistud Goeds Inventy, (Being cast of Goods sold for Fol300 Cash All Dr. To sales Ale (Being Job 300 sold for cash ) I Cast of Goods sold to factory overhead Overheads applied to cost of Goods sold Alc. 60000 I Equipm 876000 876,000 356 3561 699000 690060 12,000 12000

Notes (g) finished Goods inventory : $356520 + 51950 = $ 876000 j) 181000 53000 3 nauufactured factory overheas: U. Overheads applied to Jobs Overlreads incurred: in & Indirect Materials Indirect labor 28,800 factory Reut 30,000 factory Utilities 22,000 193000 60,000 factory Equipment-dep /2000 Onder applied ovesteaed Schedule of Cost g Goods manufactuld.' Marcelino Cocupacy Schedule of Cost of lobels a for the mouth eneld April so a Direct material used 467000 Direct labor used 362000 factory overhead applied Total Moucefacturing Costs 1p 10,000 Add work in preen march 31 132000 Total cost of work in process. 1142,000 les work in Process April 30 (Job 308) 266000 Cost of Goods mammachered Gross Profit for April : sales Cost of Job 306 356520 Add Under applied overhead 8 76,000 690000 /2.800 368,500 $3,21,520

5) Inventories as on 20th Apsil & Raw Material (Note-a) Norle un process (Job 308) fuished Goods (Job 307) Total Inventories 109000 266000 519500 894500 Note a Raw material loventory : of 2000 Beginning Raw Material insectory 540000 Purchases - 467000 Direct Material used Indirect material used - 53000 Euding Raw teateeebel incutory 109,000