Question

4-a. Compute gross profit for April. . Show how to present the inventories on the April 30 balance sheet

Required information [The following information applies to the questions displayed below.) Marcelino Co.'s March 31 inventory of raw materials is $88,000. Raw materials purchases in April are $600,000, and factory payroll cost in April is $385,000. Overhead costs incurred in April are: indirect materials, $55,000; indirect labor, $22,000; factory rent, $33,000; factory utilities, $23,000; and factory equipment depreciation, $57,000. The predetermined overhead rate is 50% of direct labor cost. Job 306 is sold for $680,000 cash in April. Costs of the three jobs worked on in April follow. Job 306 Job 307 Job 308 $ 26,000 21,000 10,500 $ 42,000 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 30 136.000 104,000 200,000 155,000 $105,000 104,000 Finished (hold) Finished (unsold) In process 4-a. Compute gross profit for April 4-b. Show how to present the inventories on the April 30 balance sheet.

Answer 1

4a
Gross Profit	322000
4b
Inventories
Raw materials	192000	=88000+600000-441000-55000
Work in Process	261000
Finished goods	501500
Total inventories	954500
Workings:
	Job 306	Job 307	Job 308	April Total
From March
Direct Materials	26000	42000		68000
Direct Labor	21000	18000		39000
Applied overhead	10500	9000		19500
Beginning goods in process	57500	69000	0	126500
For April
Direct Materials	136000	200000	105000	441000
Direct Labor	104000	155000	104000	363000
Applied overhead	52000	77500	52000	181500
Total costs added in April	292000	432500	261000	985500
Total costs (April 30)	349500	501500	261000	1112000
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	55000
	Indirect labor	22000
	Factory rent	33000
	Factory utilities	23000
	Factory depreciation equipment	57000
	Actual factory overhead	190000
	Applied overhead	181500
	Underapplied overhead	8500
	Sales	680000
	Less: Cost of goods sold	349500
	Less: Underapplied overhead	8500
	Gross Profit	322000