Marcelino Co.\'s March 31 inventory of raw materials is $88,000. Raw materials p
ID: 2724569 • Letter: M
Question
Marcelino Co.'s March 31 inventory of raw materials is $88,000. Raw materials purchases in April are $560,000, and factory payroll cost in April is $365,000. Overhead costs incurred in April are: indirect materials, $54,000; indirect labor, $26,000; factory rent, $32,000; factory utilities, $21,000; 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 blances on march 31 direct materials 28000 direct labor 22000 applied overhead 11000 costs during april direct materials 133000 direct labor 102000 applied overhead ? job 307 43000, 16000, 8000, 205000, 151000, ?. Job 308 ?, ?, ?, 100000, 102000, ?
Determine the total of each production cost incurred for April (direct labor, direct materials, and applied overhead), and the total cost assigned to each job (including the balances from March 31).
Materials purchases (on credit).
Direct materials used in production.
Actual overhead costs incurred, including indirect materials. (Factory rent and utilities are paid in cash.)
Assignment of any underapplied or overapplied overhead to the Cost of Goods Sold account. (The amount is not material.)
Prepare journal entries for the month of April to record the above transactions.
Prepare a schedule of cost of goods manufactured.
Compute gross profit for April.
Show how to present the inventories on the April 30 balance sheet.
Explanation / Answer
1) TOTAL MANUFACTURING COSTS AND COSTS ASSIGNED TO EACH JOB:
(cost of Job 306 transferred on sale)
1) TOTAL MANUFACTURING COSTS AND COSTS ASSIGNED TO EACH JOB:
JOB 306 JOB 307 JOB 308 TOTAL Carried forward from March: direct materials 28000 43000 0 71000 direct labor 22000 16000 0 38000 applied overhead 11000 8000 0 19000 beginning WIP 61000 67000 0 128000 Costs added in April: direct materials 133000 205000 100000 438000 direct labor 102000 151000 102000 355000 applied overhead 51000 75500 51000 177500 Costs added in April 286000 431500 253000 970500 TOTAL COSTS INCURRED UPTO APRIL 30TH 347000 498500 253000 1098500 2) JOURNAL ENTRIES: DEBIT CREDIT raw materials inventory 560000 accounts payable 560000 (purchase of raw materials on account) work in process 438000 factory overhead control 54000 raw materials inventory 492000 (raw materials issued for production) work in process 355000 factory overhead control 26000 salaries and wages payable 381000 (labor cost incurred during the month) factory overhead control 109000 189000 cash control 53000 accumulated depreciation 56000 (overhead expenses incurred for the month) work in process 177500 factory overhead control 177500 177500 (overhead applied to jobs during the month) finished goods control 845500 work in process 845500 (completion of Job 306 & 307) cost of goods sold 347000 finished goods control 347000(cost of Job 306 transferred on sale)
accounts receivable 685000 sales 685000 (sale of Job 306) work in process 3304 cost of goods sold 3304 finished goods 4892 factory overhead control 11500 (assignment of underapplied overhead) Worksheet for assigment of underapplied OH Overhead Underapplied applied ratio OH Prorated 51000 0.2873 3304 51000 0.2873 3304 75500 0.4254 4892 177500 1.0000 11500 GROSS PROFIT FOR APRIL: sales 685000 less: cost of goods sold 350304 gross profit for april 334696 INVENTORIES IN BALANCE SHEET: raw material 156000 work in process inventory 256304 finished foods inventory 503392 915696 SCHEDULE OF COST OF GOODS MANUFACTURED: Direct materials used: beginning raw materials 88000 purchases 560000 648000 indirect materials used 54000 ending raw material inventory 156000 Direct materials used 438000 Direct labor 355000 Factory overhead: indirect materials used 54000 indirect labor 26000 rent 32000 depreciation 56000 utilities 21000 Total manufacturing overhead 189000 Total manufacturing costs 982000 Add beginning work in process 128000 1110000 Less: ending work in process 256304 cost of goods manufactured 853696