Saturday, March 10, 2018

Chapter 15: Production costs computed and recorded; reports prepared

Marcelino Co.'s March 31 inventory of raw materials is $80,000. Raw materials purchases in April are $500,000, and factory payroll cost in April is $363,000. Overhead costs incurred in April are: indirect materials, $50,000; indirect labor, $23,000; factory rent, $32,000; factory utilities, $19,000; and factory equipment depreciation, $51,000. The predetermined overhead rate is 50% of direct labor cost. Job 306 is sold for $635,000 cash in April. Costs of the three jobs worked on in April follow.
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).

  1. Materials purchases (on credit).
  2. Direct materials used in production.
  3. Direct labor paid and assigned to Work in Process Inventory.
  4. Indirect labor paid and assigned to Factory Overhead.
  5. Overhead costs applied to Work in Process Inventory.
  6. Actual overhead costs incurred, including indirect materials. (Factory rent and utilities are paid in cash.)
  7. Transfer of Jobs 306 and 307 to Finished Goods Inventory.
  8. Cost of goods sold for Job 306.
  9. Revenue from the sale of Job 306.
  10. Assignment of any underapplied or overapplied overhead to the Cost of Goods Sold account. (The amount is not material.)

2. Prepare journal entries for the month of April to record the above transactions.


Explanation:
g. Finished goods inventory ($351,000 + $512,000) = $863,000

j. Factory Overhead

Overhead applied to jobs                      $ 170,000
Overhead incurred
Indirect materials                $ 50,000
Indirect labor                         23,000
Factory rent                           32,000
Factory utilities                     19,000
Factory equip. depreciation.  51,000        175,000
Underapplied overhead                         $  12,500

3. Prepare a schedule of cost of goods manufactured.


4.1 Compute gross profit for April.


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


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20 comments:

  1. UnknownJune 30, 2018 at 6:37 PM

    How did you get the figure for the Raw Materials Inventories section?

    ReplyDelete
  2. UnknownSeptember 16, 2019 at 6:16 PM

    how did you get raw materials inventory

    ReplyDelete
    Replies
    1. Unknown3January 22, 2020 at 1:33 AM

      Beg.RM 80,000
      Purch. 500,000
      DM (455,000)
      IDM (50,000)
      End.RM 75,000

      Delete
  3. Unknown3January 22, 2020 at 1:31 AM

    This comment has been removed by the author.

    ReplyDelete
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  5. UnknownJune 23, 2020 at 8:33 PM

    How did you calculate Jurnal entry 13: Assignment of any underapplied or overapplied overhead to the Cost of Goods Sold account. (The amount is not material.)

    ReplyDelete
  6. JDJuly 11, 2020 at 7:15 PM

    how do you get 5000 on the last journal entry?

    ReplyDelete
  7. UnknownSeptember 6, 2020 at 4:06 PM

    How did you find cost of goods sold, in the gross profit question?

    ReplyDelete
  8. UnknownSeptember 10, 2020 at 10:54 PM

    Cost of goods sold(h)+Cost of goods sold(j)=$321,500+$5,000=$326,500

    ReplyDelete
  9. MasterDJFOctober 1, 2020 at 2:15 PM

    *Answer to #13*
    Factory overhead is $170,000 (see #5 in General Journal)
    To find under or overapplied overhead, take the sum of all Overhead costs incurred in April: 50,000 + 23,000 + 32,000 + 19,000 + 51,000 = $175,000 (listed in the paragraph)
    Since 170,000 - 175,000 = -5,000 we have 5,000 underapplied overhead.


    *NOTE* I believe the 12,500 listed above as the underapplied overhead is an error and should be 5,000. There is another problem like this one online where some of the values are different and the underapplied overhead is actually 12,500.

    ReplyDelete
    Replies
    1. UnknownOctober 30, 2021 at 3:58 AM

      Tysm! This was super helpful in figuring out this problem

      Delete
  10. UnknownOctober 4, 2020 at 1:03 PM

    For question G in the general journal you got the number 863,000 from 351,000 + 512,000. I am confused where you got the 351,000 and 512,000.

    ReplyDelete
  11. UnknownOctober 5, 2020 at 1:09 AM

    How did you get applied overhead

    ReplyDelete
  12. ddOctober 5, 2020 at 7:12 PM

    how did you get $75,000 raw material ?

    ReplyDelete
  13. heather lost in the world of accountingJanuary 23, 2021 at 4:13 PM

    how do you calculate the answer for c?

    ReplyDelete
  14. UnknownJanuary 31, 2021 at 10:46 AM

    Nice 👌

    ReplyDelete
  15. iloveaccountingMarch 4, 2021 at 7:30 AM

    g. Finished goods inventory ($351,000 + $512,000) = $863,000
    how did you get that 512,000? isn't it 507,000?

    ReplyDelete

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