On April 12, after the close of business, Singh & Sons had a devastating fire that destroyed the companyâs work-in-process and finished-goods inventories. Fortunately, all raw materials escaped damage because materials owned by the firm were stored in another warehouse. The following information is available:
Sales revenue through April 12 $ 340,000 Income before taxes through April 12 68,000 Direct labor through April 12 120,000 Cost of goods available for sale, April 12 285,000 Work-in-process inventory, January 1 21,000 Finished-goods inventory, January 1 35,000 Gross margin 30 % of sales
The firmâs accountants determined that the cost of direct materials used normally averages 25 percent of prime costs (i.e., direct material + direct labor). In addition, manufacturing overhead is 50 percent of the firmâs total production costs.
Required:
Singh & Sons is in the process of negotiating a settlement with its insurance company. Prepare an estimate of the cost of work-in-process and finished-goods inventories that were destroyed by the fire.
Cost of finished-goods inventory Cost of work-in-process inventory
On April 12, after the close of business, Singh & Sons had a devastating fire that destroyed the companyâs work-in-process and finished-goods inventories. Fortunately, all raw materials escaped damage because materials owned by the firm were stored in another warehouse. The following information is available:
| Sales revenue through April 12 | $ | 340,000 | |
| Income before taxes through April 12 | 68,000 | ||
| Direct labor through April 12 | 120,000 | ||
| Cost of goods available for sale, April 12 | 285,000 | ||
| Work-in-process inventory, January 1 | 21,000 | ||
| Finished-goods inventory, January 1 | 35,000 | ||
| Gross margin | 30 | % of sales | |
The firmâs accountants determined that the cost of direct materials used normally averages 25 percent of prime costs (i.e., direct material + direct labor). In addition, manufacturing overhead is 50 percent of the firmâs total production costs.
Required:
Singh & Sons is in the process of negotiating a settlement with its insurance company. Prepare an estimate of the cost of work-in-process and finished-goods inventories that were destroyed by the fire.
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Related questions
Marcelino Co.'s March 31 inventory of raw materials is $82,000. Raw materials purchases in April are $600,000, and factory payroll cost in April is $390,000. Overhead costs incurred in April are: indirect materials, $59,000; indirect labor, $29,000; factory rent, $34,000; factory utilities, $21,000; and factory equipment depreciation, $61,000. The predetermined overhead rate is 50% of direct labor cost. Job 306 is sold for $670,000 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 | $ | 28,000 | $ | 39,000 | ||||||||
| Direct labor | 24,000 | 18,000 | ||||||||||
| Applied overhead | 12,000 | 9,000 | ||||||||||
| Costs during April | ||||||||||||
| Direct materials | 133,000 | 220,000 | $ | 115,000 | ||||||||
| Direct labor | 105,000 | 154,000 | 102,000 | |||||||||
| 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 below transactions. (Hint, there are 13 steps)
Materials purchases (on credit).
Direct materials used in production.
Direct labor paid and assigned to Work in Process Inventory.
Indirect labor paid and assigned to Factory Overhead.
Overhead costs applied to Work in Process Inventory.
Actual overhead costs incurred, including indirect materials. (Factory rent and utilities are paid in cash.)
Transfer of Jobs 306 and 307 to Finished Goods Inventory.
Cost of goods sold for Job 306.
Revenue from the sale of Job 306.
Assignment of any underapplied or overapplied overhead to the Cost of Goods Sold account. (The amount is not material.)
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Problem 15-1A Production costs computed and recorded; reports prepared LO C2, P1, P2, P3, P4
[The following information applies to the questions displayed below.]
Marcelino Co.'s March 31 inventory of raw materials is $82,000. Raw materials purchases in April are $580,000, and factory payroll cost in April is $381,000. Overhead costs incurred in April are: indirect materials, $59,000; indirect labor, $25,000; factory rent, $31,000; factory utilities, $24,000; and factory equipment depreciation, $58,000. The predetermined overhead rate is 50% of direct labor cost. Job 306 is sold for $650,000 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 | $ | 28,000 | $ | 36,000 | ||||||||
| Direct labor | 24,000 | 15,000 | ||||||||||
| Applied overhead | 12,000 | 7,500 | ||||||||||
| Costs during April | ||||||||||||
| Direct materials | 139,000 | 205,000 | $ | 100,000 | ||||||||
| Direct labor | 103,000 | 152,000 | 101,000 | |||||||||
| Applied overhead | ? | ? | ? | |||||||||
| Status on April 30 | Finished (sold) | Finished (unsold) | In process | |||||||||
rev: 03_15_2018_QC_CS-121813
Problem 15-1A Part 1
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).
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Problem 15-1A Part 2
- Materials purchases (on credit).
- Direct materials used in production.
- Direct labor paid and assigned to Work in Process Inventory.
- Indirect labor paid and assigned to Factory Overhead.
- Overhead costs applied to Work in Process Inventory.
- Actual overhead costs incurred, including indirect materials. (Factory rent and utilities are paid in cash.)
- Transfer of Jobs 306 and 307 to Finished Goods Inventory.
- Cost of goods sold for Job 306.
- Revenue from the sale of Job 306.
- 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.
Problem 15-1A Part 3
3. Prepare a schedule of cost of goods manufactured.
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Marcelino Co.'s March 31 inventory of raw materials is $82,000. Raw materials purchases in April are $520,000, and factory payroll cost in April is $379,000. Overhead costs incurred in April are: indirect materials, $59,000; indirect labor, $22,000; factory rent, $36,000; factory utilities, $25,000; and factory equipment depreciation, $58,000. The predetermined overhead rate is 50% of direct labor cost. Job 306 is sold for $655,000 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 | $ | 36,000 | ||||||||
| Direct labor | 24,000 | 15,000 | ||||||||||
| Applied overhead | 12,000 | 7,500 | ||||||||||
| Costs during April | ||||||||||||
| Direct materials | 135,000 | 215,000 | $ | 115,000 | ||||||||
| Direct labor | 103,000 | 151,000 | 103,000 | |||||||||
| Applied overhead | ? | ? | ? | |||||||||
| Status on April 30 | Finished (sold) | Finished (unsold) | In process | |||||||||
Problem 19-1A Part 1
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).
Marcelino Co.'s March 31 inventory of raw materials is $82,000. Raw materials purchases in April are $520,000, and factory payroll cost in April is $379,000. Overhead costs incurred in April are: indirect materials, $59,000; indirect labor, $22,000; factory rent, $36,000; factory utilities, $25,000; and factory equipment depreciation, $58,000. The predetermined overhead rate is 50% of direct labor cost. Job 306 is sold for $655,000 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 | $ | 36,000 | ||||||||
| Direct labor | 24,000 | 15,000 | ||||||||||
| Applied overhead | 12,000 | 7,500 | ||||||||||
| Costs during April | ||||||||||||
| Direct materials | 135,000 | 215,000 | $ | 115,000 | ||||||||
| Direct labor | 103,000 | 151,000 | 103,000 | |||||||||
| Applied overhead | ? | ? | ? | |||||||||
| Status on April 30 | Finished (sold) | Finished (unsold) | In process | |||||||||
Problem 19-1A Part 2
Materials purchases (on credit).
Direct materials used in production.
Direct labor paid and assigned to Work in Process Inventory.
Indirect labor paid and assigned to Factory Overhead.
Overhead costs applied to Work in Process Inventory.
Actual overhead costs incurred, including indirect materials. (Factory rent and utilities are paid in cash.)
Transfer of Jobs 306 and 307 to Finished Goods Inventory.
Cost of goods sold for Job 306.
Revenue from the sale of Job 306.
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. 1-13
Marcelino Co.'s March 31 inventory of raw materials is $82,000. Raw materials purchases in April are $520,000, and factory payroll cost in April is $379,000. Overhead costs incurred in April are: indirect materials, $59,000; indirect labor, $22,000; factory rent, $36,000; factory utilities, $25,000; and factory equipment depreciation, $58,000. The predetermined overhead rate is 50% of direct labor cost. Job 306 is sold for $655,000 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 | $ | 36,000 | ||||||||
| Direct labor | 24,000 | 15,000 | ||||||||||
| Applied overhead | 12,000 | 7,500 | ||||||||||
| Costs during April | ||||||||||||
| Direct materials | 135,000 | 215,000 | $ | 115,000 | ||||||||
| Direct labor | 103,000 | 151,000 | 103,000 | |||||||||
| Applied overhead | ? | ? | ? | |||||||||
| Status on April 30 | Finished (sold) | Finished (unsold) | In process | |||||||||
Problem 19-1A Part 3
3. Prepare a schedule of cost of goods manufactured.
Marcelino Co.'s March 31 inventory of raw materials is $82,000. Raw materials purchases in April are $520,000, and factory payroll cost in April is $379,000. Overhead costs incurred in April are: indirect materials, $59,000; indirect labor, $22,000; factory rent, $36,000; factory utilities, $25,000; and factory equipment depreciation, $58,000. The predetermined overhead rate is 50% of direct labor cost. Job 306 is sold for $655,000 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 | $ | 36,000 | ||||||||
| Direct labor | 24,000 | 15,000 | ||||||||||
| Applied overhead | 12,000 | 7,500 | ||||||||||
| Costs during April | ||||||||||||
| Direct materials | 135,000 | 215,000 | $ | 115,000 | ||||||||
| Direct labor | 103,000 | 151,000 | 103,000 | |||||||||
| Applied overhead | ? | ? | ? | |||||||||
| Status on April 30 | Finished (sold) | Finished (unsold) | In process | |||||||||
Problem 19-1A Part 4
4.1 Compute gross profit for April.
4.2 Show how to present the inventories on the April 30 balance sheet.
