Question

Problem 02-1A Production costs computed and recorded; reports prepared LO P1, P2, P3, P4

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Marcelino Co.'s March 31 inventory of raw materials is $83,000. Raw materials purchases in April are $500,000, and factory payroll cost in April is $383,000. Overhead costs incurred in April are: indirect materials, $51,000; indirect labor, $28,000; factory rent, $32,000; factory utilities, $20,000; and factory equipment depreciation, $53,000. 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.

	Job 306				Job 307				Job 308
Balances on March 31
Direct materials		$	27,000			$	41,000
Direct labor			21,000				19,000
Applied overhead			10,500				9,500
Costs during April
Direct materials			134,000				210,000			$	120,000
Direct labor			101,000				152,000				102,000
Applied overhead			?				?				?
Status on April 30	Finished (sold)				Finished (unsold)					In process

Problem 02-1A Part 2

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

	General Journal	Debit	Credit
1	Raw materials inventory	500000
	Accounts Payable		500000
2	Work in Process inventory	464000
	Raw materials inventory		464000
3	Work in Process inventory	355000
	Cash		355000
4	Factory overhead	28000
	Cash		28000
5	Work in Process inventory	177500
	Factory overhead		177500
6	Factory overhead	51000
	Raw materials inventory		51000
7	Factory overhead	20000
	Cash		20000
8	Factory overhead	53000
	Accumulated depreciation -factory equipment		53000
9	Factory overhead	32000
	Cash		32000
10	Finished goods inventory	851500
	Work in Process inventory		851500
11	Cost of goods sold	344000
	Finished goods inventory		344000
12	Cash	635000
	Sales		635000
13	Cost of goods sold	6500
	Factory overhead		6500
Workings:
From March
Direct Materials	27000	41000		68000
Direct Labor	21000	19000		40000
Applied overhead	10500	9500		20000
Beginning goods in process	58500	69500	0	128000
For April
Direct Materials	134000	210000	120000	464000
Direct Labor	101000	152000	102000	355000
Applied overhead	50500	76000	51000	177500
Total costs added in April	285500	438000	273000	996500
Total costs (April 30)	344000	507500	273000	1124500
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	28000
	Factory rent	32000
	Factory utilities	20000
	Factory depreciation equipment	53000
	Actual factory overhead	184000
	Applied overhead	177500
	Underapplied overhead	6500