Ciolino 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

Ciolino 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.

	Job 306				Job 307				Job 308
Balances on March 31
Direct materials		$	29,000			$	35,000
Direct labor			20,000				18,000
Applied overhead			10,000				9,000
Costs during April
Direct materials			135,000				220,000			$	100,000
Direct labor			85,000				150,000				105,000
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), factory payroll (paid in cash), and actual overhead costs including indirect materials and indirect labor. (Factory rent and utilities are paid in cash.) b. Assignment of direct materials, direct labor, and applied overhead costs to the Goods in Process Inventory. c. Transfer of Jobs 306 and 307 to the Finished Goods Inventory. d. Cost of goods sold for Job 306. e. Revenue from the sale of Job 306. f. 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: c. Finished goods inventory ($321,500 + $507,000) = $828,500 f. 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 $ 5,000

3. Prepare a manufacturing statement for April (use a single line presentation for direct materials and show the details of overhead cost).  4.1 Compute gross profit for April.   4.2 Show how to present the inventories on the April 30 balance sheet. Explanation: Presentation of inventories on the April 30 balance sheet      Beginning raw materials inventory $   80,000   Purchases 500,000   Direct materials used (455,000 )   Indirect materials used (50,000 )      Ending raw materials inventory $ 75,000

The following information is available for Lock-Safe Company, which produces special-order security products and uses a job order cost accounting system.

The following information is available for Lock-Safe Company, which produces special-order security products and uses a job order cost accounting system.

   

	April 30		May 31
Inventories
Raw materials	$	42,000	$	49,000
Goods in process		10,400		18,500
Finished goods		65,000		33,000
Activities and information for May
Raw materials purchases (paid with cash)				187,000
Factory payroll (paid with cash)				400,000
Factory overhead
Indirect materials				12,000
Indirect labor				79,000
Other overhead costs				103,500
Sales (received in cash)				1,260,000
Predetermined overhead rate based on direct labor cost				50	%

  
Determine whether there is over or underapplied overhead using T-accounts.

 

Explanation:

Cost of direct labor used
Total factory payroll	$	400,000
Less indirect labor		(79,000)
Cost of direct labor used	$	321,000

  

Factory overhead: $321,000 × 50% = $160,500.

   

Indirect materials	$	12,000
Indirect labor		79,000
Other overhead costs		103,500
Total actual overhead incurred		194,500
Overhead applied		160,500
Overapplied overhead	$	34,000