Answer:
Marcelino Co.
1. Assignment of underapplied or overapplied overhead to the Cost of Goods Sold account:
a. Materials purchases (on credit) = $560,000
b. Direct materials used in production = $450,000
c. Direct labor paid and assigned to Work in Process Inventory = $359,000
d. Indirect labor paid and assigned to Factory Overhead = $23,000
e. Overhead costs applied to Work in Process Inventory = $179,500
f. Actual overhead costs incurred, including indirect materials. (Factory rent and utilities are paid in cash.) = $196,000
g. Transfer of Jobs 306 and 307 to Finished Goods Inventory = $844,000
h. Cost of goods sold for Job 306 = $350,500
i. Revenue from the sale of Job 306 = $655,000
j. Assignment of any underapplied or overapplied overhead to the Cost of Goods Sold account. (The amount is not material.) = $16,500
2. Journal Entries:
Debit Cost of Goods Sold $16,500
Credit Manufacturing Overhead $16,500
To assign underapplied overhead to the cost of goods sold.
Journal Entries to record April Transactions:
a. Debit Raw materials inventory $560,000
Credit Accounts payable $560,000
To record the purchase of raw materials on account.
b. Debit Work in process inventory $450,000
Credit Raw materials inventory $450,000
To record the materials used in production.
c. Debit Work in process inventory $359,000
Credit Cash 359,000
To record payment for direct labor costs.
d. Debit Factory overhead $23,000
Credit Cash $23,000
To record payment for indirect labor costs.
e. Debit Work in process inventory $179,500
Credit Factory overhead $179,500
To record overhead assigned to WIP.
f(1). Debit Factory overhead $54,000
Credit Raw materials inventory $54,000
To record indirect materials used in production.
f(2). Debit Factory overhead $24,000
Credit Cash $24,000
To record payment for factory utilities.
f(3). Debit Factory overhead $56,000
Credit Accumulated depreciation-factory equipment $56,000
To record factory equipment depreciation.
f(4). Debit Factory overhead $39,000
Credit Cash $39,000
To record payment for factory rent.
g. Debit Finished Goods Inventory $844,000
Credit Work in process inventory $844,000
To record the transfer of Jobs 306 and 307 to Finished Goods Inventory.
h. Debit Cost of goods sold $350,500
Credit Finished goods inventory $350,500
To record the cost of Job 306 sold.
i. Debit Cash $655,000
Credit Sales Revenue $655,000
To record the sale of Job 306.
j. Debit Cost of goods sold $16,500
Credit Factory overhead $16,500
To assign the underapplied overhead.
Explanation:
a) Data and Calculations:
March 31 Inventory of raw materials = $90,000
Raw materials purchases in April = $560,000
Factory payroll cost in April = $368,000
Overhead costs incurred in April:
Indirect materials, $54,000
Indirect labor, $23,000
Factory rent, $39,000
Factory utilities, $24,000
Factory equipment depreciation, $56,000
Total overhead costs $196,000
Predetermined overhead rate = 50% of direct labor costs
Sale of Job 306 = $655,000
Cost Sheet:
Job 306 Job 307 Job 308
Balances on March 31
Direct materials $31,000 $37,000 $68,000
Direct labor 21,000 18,000 39,000
Applied overhead 10,500 9,000 19,500
Beginning work in process $62,500 $64,000 $126,500 $253,000
Costs during April
Direct materials 135,000 200,000 $115,000 450,000
Direct labor 102,000 153,000 104,000 359,000
Applied overhead 51,000 76,500 52,000 179,500
Total cost of production $350,500 $493,500 $397,500 $1,241,500
Status on April 30 Finished (sold) Finished (unsold) In process Total
Underapplied or Overapplied Overhead:
Actual overhead costs = $196,000
Overhead assigned = 179,500
Underapplied overhead $16,500
