College Accounting: P26-1A Ciolino Co.'s March 31 inventory of raw materials

College Accounting 
P26-1A Production costs computed and recorded; reports prepared 
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 above transactions. 
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. 
5. The over- or underapplied overhead is closed to Cost of Goods Sold. Discuss how this adjustment impacts business decision marking regarding individual jobs or batches of jobs.
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