Question

Problem 15-1A Production costs computed and recorded; reports prepared LO C2, P1, P2, P3, P4 The following information applies to the questions displayed below! in April is $384,000. Over 523,000; and factory equ85.000 cash in April Marcelino Co's March 31 inventory of raw materials is $87,000. Raw materials purchases in April are $600.000, and factory payroll cost in April is $384.000. Overhead costs incurred in April are indirect materials, $58,000: Indirect labor, $23.000 factory rent, $40,000; factory utilities, $23,000, and factory equipment depreciation, $56,000. The predetermined overhead rate is 50% of direct labor cost. Job 306 is sold for $685.000 cash in April. Costs of the three jobs worked on in April follow. Job 306 Job 307 Job 398 $ 28,000 24,000 12,000 $ 45,000 18.000 9,000 Balances on March 31 Direct materials Direct labor Applied overhead Costs during April Direct materials Direct labor Applied overhead Status on April 30 135,000 103,000 210,000 153,000 $115,000 105,000 Finished (sold) Finished (unsold) In process Problem 15-1A Part 2 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 1. Actual overhead costs 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

Answer 1

Workings:

Job 306 Job 307 Job 308 Total From March: Direct Materials Direct Labor Applied Overheads Beginning goods in process $ 28,000 $ 24,000 $ 12,000 $ 64,000 (28,000 + 24,000 + 12,000) $ 45,000 $ 18,000 $ 9,000 $ 72,000 (45,000 + 18,000 + 9,000) $ $ $ $ 73,000 42,000 21,000 136,000 For April Direct Materials Direct Labor Applied Overheads Calculation Total costs added in April 460,000 361,000 180,500 1,001,500 $ 135,000 $ 210,000 $ 115,000 $ $ 103,000 $ 153,000 $ 105,000 $ $ 51,500 $ 76,500 $ 52,500 $ (103,000 X 50%) (153,000 X 50%) (105,000 X 50%) $ 289,500 $ 439,500 $ 272,500 $ (135,000 + 103,000+ (210,000 + 153,000 + (115,000 + 105,000 51,500) 76,500) +52,500) 353,500 $ 511,500 $ 272,500 $ (64,000 + 289,500) (72,000 + 439,500) Finished (sold) Finished unsold) In Process Finished goods Work in Process Cost of goods sold inventory Inventory Calculation Total costs (April 30) Calculation Status on April 30 1,137,500 April 30 cost included in

Journal Entries:

Credit Question 2 Transaction General Journal Debit Raw Materials Inventory $ 600,000 Accounts Payable (To record purchase of raw material on account) $ 600,000 Work in Process Inventory $ 460,000 Raw Materials Inventory (To record the consumption of raw material) $ 460,000 Work in Process Inventory $ 361,000 Cash $ 361,000 (To record expense and payment of direct labor) 23,000 Factory Overhead $ Cash (To record payment of indirect labor) $ 23,000 Work in Process e. Inventory $ 180,500 Factory Overhead $ (To record overheads incurred using predetermined rate) 180,500

Journal Entries:

Credit Debit $ 58,000 Transaction General Journal f(1). Factory Overhead Raw Materials Inventory (To record indirect material used) $ 58,000 $ 23,000 f(2). Factory Overhead Cash (To record factory utilities incurred) 23,000 f(3). Factory Overhead $ 56,000 Accumulated overhead - factory equipment $ (To record depreciation expense on factory equipment) 56,000 $ 40,000 f(4). Factory Overhead Cash (To record payment of factory rent) $ 40,000 Finished goods inventory g (353,500 + 511,500) $ 865,000 Work in Process Inventory (To record completion of Jobs 306 and 307) $ 865,000

Journal Entries:

Credit Debit $ 58,000 Transaction General Journal f(1). Factory Overhead Raw Materials Inventory (To record indirect material used) $ 58,000 $ 23,000 f(2). Factory Overhead Cash (To record factory utilities incurred) 23,000 f(3). Factory Overhead $ 56,000 Accumulated overhead - factory equipment $ (To record depreciation expense on factory equipment) 56,000 $ 40,000 f(4). Factory Overhead Cash (To record payment of factory rent) $ 40,000 Finished goods inventory g (353,500 + 511,500) $ 865,000 Work in Process Inventory (To record completion of Jobs 306 and 307) $ 865,000

Journal Entries:

Credit Transaction General Journal Debit Cost of goods sold $ 353,500 Finished goods inventory (To record cost of goods sold for Job 306) $ 353,500 $ 685,000 Cash Sales (To record sale of Job 306) $ 685,000 $ 19,500 Cost of goods sold Factory Overhead (To record underapplied overhead) $ 19,500 180,500 Working for Transaction j. Overhead Applied to Jobs $ Overheads incurred: Indirect material $ Indirect labor $ Factory rent $ Factory utilities $ Factory equipment depreciation $ Total $ 58,000 23,000 40,000 23,000 56,000 200,000 Underapplied overhead (180,500 - 200,000) $ 19,500