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).
2. Prepare journal entries for
the month of April to record the following.
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.)
3. Prepare a manufacturing
statement for April (use a single line presentation for direct materials and
show the details of overhead cost).
4. Compute gross profit for
April. Show how to present the inventories on the April 30 balance sheet.
Analysis Component
5. The over- or underapplied
overhead is closed to Cost of Goods Sold. Discuss how this adjustment impacts
business decision making regarding individual jobs or batches of jobs.
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).
2. Prepare journal entries for
the month of April to record the following.
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.)
3. Prepare a manufacturing
statement for April (use a single line presentation for direct materials and
show the details of overhead cost).
4. Compute gross profit for
April. Show how to present the inventories on the April 30 balance sheet.
Analysis Component
5. The over- or underapplied
overhead is closed to Cost of Goods Sold. Discuss how this adjustment impacts
business decision making regarding individual jobs or batches of jobs.
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).
2. Prepare journal entries for
the month of April to record the following.
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.)
3. Prepare a manufacturing
statement for April (use a single line presentation for direct materials and
show the details of overhead cost).
4. Compute gross profit for
April. Show how to present the inventories on the April 30 balance sheet.
Analysis Component
5. The over- or underapplied
overhead is closed to Cost of Goods Sold. Discuss how this adjustment impacts
business decision making regarding individual jobs or batches of jobs.
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).
2. Prepare journal entries for
the month of April to record the following.
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.)
3. Prepare a manufacturing
statement for April (use a single line presentation for direct materials and
show the details of overhead cost).
4. Compute gross profit for
April. Show how to present the inventories on the April 30 balance sheet.
Analysis Component
5. The over- or underapplied
overhead is closed to Cost of Goods Sold. Discuss how this adjustment impacts
business decision making regarding individual jobs or batches of jobs.
