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Marcelino Co.'s March 31 inventory of raw materials is $88,000. Raw materials purchases in April are $570,000, and factory payroll cost in April is $391,000. Overhead costs incurred in April are: indirect materials, $52,000; indirect labor, $29,000; factory rent, $38,000; factory utilities, $19,000; and factory equipment depreciation, $53,000. 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.

4.1 Compute gross profit for April.

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

Job 306 Job 307 Job 308 Balances on March 31 Direct materials $ 31,000 $ 36,000 Direct labor 23,000 15,000 Applied overhead 11,500 7,500 Costs during April Direct materials 130,000 210,000 $ 105,000 Direct labor 103,000 155,000 104,000 Applied overhead ? ? ? Status on April 30 Finished (sold) Finished (unsold) In process

Explanation / Answer

Job 306 Job 307 Job 308 Beginning balance of WIP on April1 65500 58500 Add: Cost incurred during the year Material 130000 210000 105000 labour 103000 155000 104000 OH @ 50% of labour ccost 51500 77500 52000 Total cost of Jobs at the April end 350,000 501000 261000 Status SOLD FINISHEd In Process Raw material Inventory: Begininig Inventory 88000 Add: Purchases 570000 Less: Consumed during the month Direct material (130000+210000+105000) 445000 Indirect material 52000 Ending raw material inventory 161000 Gross Profit for the month: Sales revenu of Job 306 635000 Less: Cost of Goods sold of Job 306 350000 Gross Profit for the month: 285000 Inventory balances on April30 Raw material inventory 161000 WIP inventory-Job 308 261000 Finished Goods Inventory-JOb307 501000

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