Problem 151A Production costs computed and recorded reports

Problem 15-1A Production costs computed and recorded; reports prepared LO C2, 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 $590,000, and factory payroll cost in April is $385,000. Overhead costs incurred in April are: indirect materials, $55,000; indirect labor, $27,000; factory rent, $39,000; factory utilities, $20,000; and factory equipment depreciation, $59,000. The predetermined overhead rate is 50% of direct labor cost. Job 306 is sold for $640,000 cash in April. Costs of the three jobs worked on in April follow.

rev: 02_06_2017_QC_CS-77766

References

Section BreakProblem 15-1A Production costs computed and recorded; reports prepared LO C2, P1, P2, P3, P4

1.

Problem 15-1A Part 1

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).

2.

Problem 15-1A Part 2

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.

Transaction Index :

.....

A. Record the entry for Materials purchases (on credit).

Record the direct materials used in production.

Record the Direct labor paid and assigned to Work in Process Inventory.

Record the indirect labor paid and assigned to Factory Overhead.

Record the entry for Overhead costs applied to Work in Process Inventory.

Record the cost of indirect materials used.

Record the cost of factory utilities, paid in cash.

Record depreciation on factory equipment.

Record the cost of factory rent, paid in cash.

Record the entry for transfer of Jobs 306 and 307 to Finished Goods Inventory.

Record the Cost of goods sold for Job 306.

Record the revenue from the sale of Job 306.

Record the entry for assignment of any underapplied or overapplied overhead to the Cost of Goods Sold.

Note: Enter debits before credits.

+

Problem 15-1A Part 3

Prepare a schedule of cost of goods manufactured.

Problem 15-1A Part 4

Compute gross profit for April.

Gross Profit=

Show how to present the inventories on the April 30 balance sheet.

Inventories

Raw Materials =

Work in Progress=

Finished Goods=

Total Inventories= $

Marcelino Co.\'s March 31 inventory of raw materials is $83,000. Raw materials purchases in April are $590,000, and factory payroll cost in April is $385,000. Overhead costs incurred in April are: indirect materials, $55,000; indirect labor, $27,000; factory rent, $39,000; factory utilities, $20,000; and factory equipment depreciation, $59,000. The predetermined overhead rate is 50% of direct labor cost. Job 306 is sold for $640,000 cash in April. Costs of the three jobs worked on in April follow.

Solution

Job 306 Job 307 Job 308 Total   Balances on March 31      Direct materials 29,000 37,000 66,000      Direct labor 22,000 14,000 36,000      Applied overhead 11,000 7,000 18,000 120,000   Costs during April      Direct materials 133,000 200,000 105,000 438,000      Direct labor D 101,000 153,000 102,000 356,000      Applied overhead D*50% 50500 76500 51000 178,000 In finished Goods 346500 487500 Ending WIP 258000 Accounts Title Dr Cr a Raw Material Inventory $590,000 Accounts Payable $590,000 b Work In process Inventory $438,000 Raw Material Inventory $438,000 c Work In process $356,000 Cash/Factory Payroll $356,000 d Manufacturing Overhead 20000 Cash 20000 e Work In process Inventory 178,000 Manufacturing Overhead 178,000 f Manufacturing Overhead 114000 Raw material Inventory 59000 Cash (33000+22000) 55000 Accumulated Depreciation-Equipment 59000 g Finished Goods Inventory 834000 Work In process Inventory 834000 h Cost of Good sold 346500 Finished Goods Inventory 346500 i Cash 670000 sales 670000 j Manufacturing Overhead 15000 Cost of Good sold 15000 (173000+20000)-178000 Cost of Goods manufactured Work in process, 1/1 120,000 Direct materials    Raw materials inventory, 1/1 83000    Raw materials purchased 590000    Total raw materials available for use 673000    Less: Raw materials inventory, 12/31 235,000       Direct materials used 438,000 Direct labor $356,000 Manufacturing overhead    Indirect labor 20000    Factory utilities 22000    Factory machinery rent 33000    Depreciation on equipment 59000    Indirect materials 59000       Total manufacturing overhead 193000 Total current manufacturing costs $987,000 Total cost of work in process $1,107,000 Less: Work in process, 12/31 258000 Cost of goods manufactured $849,000