Marcelino co.'s march 31 inventory of raw materials is $85,000. Raw materials purchases in april are $560,000, and factory payroll cost in april is $386,000. Overhead costs incurred in april are:
indirect materials, $54,000;
indirect labor, $25,000;
factory rent, $37,000;
factory utilities, $24,000; and factory equipment depreciation, $51,000.
The predetermined overhead rate is 50% of direct labor cost. Job 306 is sold for $690,000 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 $ 30,000 $ 41,000
Direct labor 23,000 16,000
Applied overhead 11,500 8,000
Costs during April
Direct materials 139,000 200,000 $ 115,000
Direct labor 103,000 150,000 104,000
Applied overhead ? ? ?
Status on April 30 Finished (sold) Finished (unsold) In process
Required:
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).a. Materials purchases (on credit).b. Direct materials used in production. c. Direct labor paid and assigned to Work in Process Inventory. d. Indirect labor paid and assigned to Factory Overhead. e. Overhead costs applied to Work in Process Inventory. f. Actual overhead costs incurred, including indirect materials. (Factory rent and utilities are paid in cash.)g. Transfer of Jobs 306 and 307 to Finished Goods Inventory. h. Cost of goods sold for Job 306.i. Revenue from the sale of Job 306.j. Assignment of any underapplied or overapplied overhead to the Cost of Goods Sold account. (The amount is not material.)

Explanation:

1. To determine each Job total costs

Job 306

1.

Opening Direct Material = $30,000

Add Input to production = $139,000

Total Inventory usage = $169,000

2.

Payroll opening balance = $23,000

April payroll = $103,000

Total payroll = $126,000

3.

Overhead opening = $11,500

April Overhead 50% of $103,000 = $51,500

Total Overhead = $63,000

Total costs of 306 = 1 + 2 + 3 = $358,000

**allocate Overhead by Raw Material usage:

Apr direct material for 306 divided by total April direct material x total April Overhead

= 139,000 / 454,000 x $191,000

= $58,478

(We have over applied Overhead by $4,522 using the 50% predetermined rate rule)

Job 307

1.

Opening Direct Material = $41,000

Add Input to production = $200,000

Total Inventory usage = $241,000

2.

Payroll opening balance = $16,000

April payroll = $150,000

Total payroll = $166,000

3.

Overhead opening = $8,000

April Overhead 50% of $150,000 = $75,000

Total Overhead = $83,000

Total costs of 307 = 1 + 2 + 3 = $490,000

**allocate Overhead by Raw Material usage:

Apr direct material for 307 divided by total April direct material x total April Overhead

= 200,000 / 454,000 x $191,000

= $84,141

(We have over applied Overhead by $1,141 using the 50% predetermined rate rule)

Job 308

1.

Opening Direct Material = $0

Add Input to production = $115,000

Total Inventory usage = $115,000

2.

Payroll opening balance = $0

April payroll = $104,000

Total payroll = $104,000

3.

Overhead opening = $0

April Overhead 50% of $104,000 = $52,000

Total Overhead = $52,000

Total costs of 308 to work in progress = 1 + 2 + 3 = $271,000

**allocate Overhead by Raw Material usage:

Apr direct material for 308 divided by total April direct material x total April Overhead

= 115,000 / 454,000 x $191,000

= $48,381

(We have over applied Overhead by $3,619 using the 50% predetermined rate rule)

B.

1. Sales of Job 306 = $690,000

Transfer of costs to Finished Goods : Job 306 = $358,000

Add Adjustments for Overhead over applied = -$4,522

Cost of sales = $353,478

2.

Sales of Job 307 = not yet sold

Transfer of costs to Finished Goods : Job 307 = $490,000

Add Adjustments for Overhead over applied = -$1,141

Cost of goods available for sales = $488,859

3. Sales of Job 308 = still work in progress

Transfer of costs to work in progress : Job 308 = $271,000

Add Adjustments for Overhead over applied = -$3,619

Cost of Work in progress = $267,381

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