Question

Required Information Problem 02-1A Production costs computed and recorded; reports prepared LO P1, P2, P3, P4 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 $540,000, and factory payroll cost in April is $376,000. Overhead costs incurred in April are: Indirect materials, $60,000. Indirect labor $22,000; factory rent, $39,000; factory utilities, $23.000, and factory equipment depreciation. $61,000. The predetermined overhead rate is 50% of direct labor cost. Job 306 is sold for $645.000 cash in April. Costs of the three Jobs worked on in April follow. Job 395 Job 3e7 Job 3es $ 26,eee 23,eee 11,5ee $ 39, 16.ee 8,eee Balances on March 31 Direct materials Direct labor Applied overhead Costs during April Direct materials Direct labor Applied overhead Status on April 3e 139, eee 102, 200,000 151,000 $1es,eee 1e1,000 Finished (sold) Finished (unsold) In process Problem 02-1A Part 4 4-6. Compute gross profit for April 4.b. Show how to present the inventories on the April 30 balance sheet Complete this question by entering your answers in the tabs below. Required 4A Required 48 show how to present the inventories on the April 30 balance sheet Raw materials Work in POCOSS Finished goods Total inventories < Required 4

Answer 1

Job 306 Job 307 Job 308 Totals $26,000 $23,000 $11,500 $60,500 $39,000 $16,000 $8,000 $63,000 $65,000 $39,000 $19,500 $123,500 --> (A) Total beginning WIP $0 From March: Direct Materials Direct Labors Factory Overhead Beginning goods in process For April: Direct Materials Direct Labors Factory Overhead Total costs added in April $139,000 $102,000 $51,000 $292,000 $200,000 $151,000 $75,500 $426,500 $105,000 $101,000 $50,500 $256,500 $444,000 $354,000 $177,000 (Ref: NOTE] $975,000 --> (B) Abbreviations used: Total costs (April 30) $256,500 $1,098,500 --> (A) + (B) COGS --> Cost of Goods Sold; $352,500 Finished (Sold) COGS $489,500 Finished (Unsold) F.G. Status (April 30) April 30 cost included in: In process F.G. --> Finished Goods; WIP WIP --> Work In Process. Total Costs accounted for $256,500 --> Ending WIP $842,000 ($352500 + $489500) NOTE: OH applied for Job 306 = $102000 x 50% = $51000; Job 307 = $151000 x 50% = $75500; Job 308 = $101000 x 50% = $50500.

Calculation of under- or over-applied factory overhead: Workings: Indirect material cost $60,000 Direct labor cost recorded in April $354,000 ($102000 + $151000 + $101000] Indirect labor cost $22,000 Overhead application rate 50% Factory rent $39,000 Overhead applied to production $177,000 [$354000 x 50%] Factory utilities $23,000 Factory equipment depreciation $61,000 Actual factory overhead costs incurred in April $205,000 Factory overhead applied in April $177,000 Ref: Workings] Under-applied factory overhead cost in April $28,000 [Difference between $177000 & $205000] (It is under-applied because applied factory overhead is less than actual factory overhead incurred) 4-B) 4-A) Sale value of Job 306 Less: Job 306's cost of goods sold Less: Under-applied overhead closed Gross Profit from Job 306 sold in April $645,000 (Given] $352,500 $28,000 [As calculated above] $264,500 Raw Materials, beginning balance Add: Purchases Less: Direct materials used Less: Indirect labor used Raw Materials, ending balance $88,000 $540,000 $444,000 ($139000 + $200000 + $ 105000] $60,000 $124,000 Therefore, Raw Materials Inventory Work in Process Inventory Finished Goods Inventory Total Inventories $124,000 [As calculated above] $256,500 (Cost of Job 308] $489,500 (Cost of Job 307] $870,000