Marcelino 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 arc: 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.

$$\begin{array}{lrrr} \textbf{}&\textbf{Job 306}&\textbf{Job 307}&\textbf{Job 308}\\[5pt] \text{Balances on March 31}&\text{}&\text{}&\text{}\\ \qquad\text{Direct materials}&\text{\$29,000}&\text{\$35,000}&\text{}\\ \qquad\text{Direct labor}&\text{20,000}&\text{18,000}&\text{}\\ \qquad\text{Applied overhead}&\text{10,000}&\text{9,000}&\text{}\\ \text{Costs during Aprll}&\text{}&\text{}&\text{}\\ \qquad\text{Direct materials}&\text{135,000}&\text{220,000}&\text{\$100,000}\\ \qquad\text{Direct labor}&\text{85,000}&\text{150,000}&\text{105,000}\\ \qquad\text{Applied overhead}&\underline{\text{\hspace{10pt\hspace{19pt}}?}}&\underline{\text{\hspace{10pt\hspace{19pt}}?}}&\underline{\text{\hspace{10pt\hspace{19pt}}?}}\\ \text{Status on April 30}&\text{Finished (sold)}&\text{Finished (sold)}&\text{Finished (sold)}\\ \end{array}$$

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).

b. Direct materials used in production.

c. Direct labor paid and assigned to Work in Process Inventory.

d. Indirect labor paid and assigned to Factory Overhead.

e. Overhead costs applied to Work in Process Inventory.

f. Actual overhead costs incurred, including indirect materials. (Factory rent and utilities arc paid in cash.)

g. Transfer of Jobs 306 and 307 to Finished Goods Inventory.

h. Cost of goods sold for Job 306.

i. Revenue from the sale of Job 306.

j. Assignment of any underapplied or overapplied overhead to the Cost of Goods Sold account. (The amount is not material.)

3. Prepare a schedule of cost of goods manufactured.

4. Compute gross profit for April. Show how to present the inventories on the April 30 balance sheet.

5. Over- or underapplied overhead is closed to Cost of Goods Sold. Is this adjustment also posted to individual job cost sheets?

3M Co. reports beginning raw materials inventory of $902 million and ending raw materials inventory of$855 million. Assume 3M purchased $3,646 million of raw materials and used$3,692 million of raw materials during the year. Compute raw materials inventory turnover and the number of days’ sales in raw materials inventory.

Marcelino 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.

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). b. Direct materials used in production. c. Direct labor paid and assigned to Work in Process Inventory. d. Indirect labor paid and assigned to Factory Overhead. e. Overhead costs applied to Work in Process Inventory. f. Actual overhead costs incurred, including indirect materials. (Factory rent and utilities are paid in cash.) g. Transfer of Jobs 306 and 307 to Finished Goods Inventory. h. Cost of goods sold for Job 306. i. Revenue from the sale of Job 306. j. Assignment of any underapplied or overapplied overhead to the Cost of Goods Sold account. (The amount is not material.)
3. Prepare a schedule of cost of goods manufactured.
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 making regarding individual jobs or batches of jobs.

The Work in Process Inventory account had a beginning balance of $\$ 16,200$ on April 1 . During April, the cost of direct materials used was $\$ 408,000$ and direct labor cost assigned to production was $\$ 56,000$. A total of $\$ 72,000$ of overhead was assigned to production in April. If the cost of finished goods manufactured was $\$ 523,500$, what was the balance in the Work in Process Inventory account on April $30$?

3M Co. reports beginning raw materials inventory of $855 million and ending raw materials inventory of$717 million. Assume 3M purchased $3,646 million of raw materials and used$3,784 million of raw materials during the year. Compute raw materials inventory turnover (round to one decimal) and the number of days’ sales in raw materials inventory (round to the nearest day).

3M Co. reports beginning raw materials inventory of $855 million and ending raw materials inventory of$717 million. Assume 3M purchased $3,646 million of raw materials and used$3,784 million of raw materials during the year. Compute raw materials inventory turnover (round to one decimal) and the number of days’ sales in raw materials inventory (round to the nearest day).

Sealy Company has beginning raw materials inventory $12,000, ending raw materials inventory$15,000, and raw materials purchases $170,000. What is the cost of direct materials used?

Bergamo Bay’s computer system generated the following trial balance on December 31, 2019. The company’s manager knows something is wrong with the trial balance because it does not show any balance for Work in Process Inventory but does show a balance for the Factory Overhead account. In addition, the accrued factory payroll (Factory Wages Payable) has not been recorded.

$$\begin{array}{lcc} &\textbf{Debit}&\textbf{Credit}\\[5pt] \text{Cash}&\text{\$\hspace{1pt}170,000}\\ \text{Accounts receivable}&\text{\hspace{10pt}75,000}\\ \text{Raw materials inventory}&\text{\hspace{10pt}80,000}\\ \text{Work in process inventory}&\text{\hspace{32pt}0}\\ \text{Finished goods inventory}&\text{\hspace{10pt}15,000}\\ \text{Prepaid rent}&\text{\hspace{15pt}3,000}\\ \text{Accounts payable}&&\text{\$\hspace{5pt}17,000}\\ \text{Notes payable}&&\text{\hspace{10pt}25,000}\\ \text{Common stock}&&\text{\hspace{10pt}50,000}\\ \text{Retained earnings}&&\text{\hspace{5pt}271,000}\\ \text{Sales}&&\text{\hspace{5pt}373,000}\\ \text{Cost of goods sold}&\text{\hspace{5pt}218,000}\\ \text{Factory overhead}&\text{\hspace{5pt}115,000}\\ \text{Operating expenses}&\underline{\text{\hspace{10pt}60,000}}&\underline{\text{\hspace{39pt}}}\\ \text{Totals}&\underline{\underline{\text{\$\hspace{1pt}736,000}}}&\underline{\underline{\text{\$\hspace{1pt}736,000}}}\\ \end{array}$$

After examining various files, the manager identifies the following six source documents that need to be processed to bring the accounting records up to date.

Materials requisition 21-3010: $10,200 direct materials to Job 402
Materials requisition 21-3011:$18,600 direct materials to Job 404
Materials requisition 21-3012: $5,600 indirect materials

Labor time ticket 6052:$36,000 direct labor to Job 402
Labor time ticket 6053: $23,800 direct labor to Job 404
Labor time ticket 6054:$8,200 indirect labor

Jobs 402 and 404 are the only units in process at year-end. The predetermined overhead rate is 200% of direct labor cost.

Required

1. Use information on the six source documents to prepare journal entries to assign the following costs. a. Direct materials costs to Work in Process Inventory. b. Direct labor costs to Work in Process Inventory. c. Overhead costs to Work in Process Inventory. d. Indirect materials costs to the Factory Overhead account. e. Indirect labor costs to the Factory Overhead account.

2. Determine the revised balance of the Factory Overhead account after making the entries in part 1. Determine whether there is any under- or overapplied overhead for the year. Prepare the adjusting entry to allocate any over- or underapplied overhead to Cost of Goods Sold, assuming the amount is not material.

3. Prepare a revised trial balance.

4. Prepare an income statement for 2019 and a balance sheet as of December 31, 2019.

5. Assume that the $5,600 on materials requisition 21-3012 should have been direct materials charged to Job 404. Indicate whether this error results in overstated or understated total assets on the balance sheet at December 31, 2019.

At the beginning of the year, Learer Company's manager estimated total direct labor cost assuming 50 persons working an average of 2,000 hours each at an average wage rate of $25 per hour. The manager also estimated the following manufacturing overhead costs for the year.

$$\begin{array}{lr} \text{Indirect labor}&\text{\$\hspace{6pt}319,200}\\ \text{Factory supervision}&\text{240,000}\\ \text{Rent on factory building}&\text{140,000}\\ \text{Factory utilities}&\text{88,000}\\ \text{Factory insurance expired}&\text{68,000}\\ \text{Depreciation-Factory equipment}&\text{480,000}\\ \text{Repairs expense-Factory equipment}&\text{60,000}\\ \text{Factory supplies used}&\text{68,800}\\ \text{Miscellaneous production costs}&\underline{\text{\hspace{17pt}36,000}}\\ \text{Total estimated overhead costs}&\underline{\underline{\text{\$1,500,000}}}\\ \end{array}$$

At year-end, records show the company incurred $1,520,000 of actual overhead costs. It completed and sold five jobs with the following direct labor costs: Job 201,$604,000: Job 202, $563,000; Job 203.$298,000; Job 204, $716,000; and Job 205,$314,000. In addition, Job 206 is in process at the end of the year and had been charged $17,000 for direct labor. No jobs were in process at the beginning of the year. The company's predetermined overhead rate is based on direct labor cost.

Required

1. Determine the following.

a. Predetermined overhead rate for the year.

b. Total overhead cost applied to each of the six jobs during the year.

c. Over- or underapplied overhead at year-end.

2. Assuming that any over- or underapplied overhead is not material, prepare the adjusting entry to allocate any over- or underappied to Cost of Goods Sold at the end of the year.

A company’s predetermined overhead rate is 150% of its direct labor costs. How much overhead is applied to a job that requires total direct labor costs of $30,000?

a.$15,000

b. $30,000

c.$45,000

d. $60,000

e.$75,000

Determine which of the following are most likely to be considered as a job and which as a job lot.

$$\begin{matrix} \text{\_\_\_\_\_\_\_ 1. Hats imprinted with company logo}\\ \text{\_\_\_\_\_\_\_ 2. Little League trophies }\\ \text{\_\_\_\_\_\_\_ 3. A handcrafted table}\\ \text{\_\_\_\_\_\_\_ 4. A 90-foot motor yacht}\\ \text{\_\_\_\_\_\_\_ 5. Wedding dresses for a chain of stores}\\ \text{\_\_\_\_\_\_\_ 6. A custom-designed home}\\ \end{matrix}$$

Moonrise Bakery applies factory overhead based on direct labor costs. The company incurred the following costs during 2015: direct materials costs, $\$ 650,000$; direct labor costs, $\$ 3,000,000$; and factory overhead costs applied, $\$ 1,800,000$.

1. Determine the company's predetermined overhead rate for 2015 .
2. Assuming that the company's $\$ 71,000$ ending Work in Process Inventory account for 2015 had $\$ 20,000$ of direct labor costs, determine the inventory's direct materials costs.
3. Assuming that the company's $\$ 490,000$ ending Finished Goods Inventory account for 2015 had $\$ 250,000$ of direct materials costs, determine the inventory's direct labor costs and its overhead costs.

Red Wing Company applies factory overhead based on direct labor costs. The company incurred the following costs during 2011: direct materials costs, $637,500; direct labor costs,$2,500,000; and factory overhead costs applied, $1,000,000.

1. Calculate the company’s predetermined overhead rate for year 2011.
2. Assuming that the company’s$57,000 ending Goods in Process Inventory account for year 2011 had $18,000 of direct labor costs, determine the inventory’s direct materials costs.
3. Assuming that the company’s$337,485 ending Finished Goods Inventory account for year 2011 had $137,485 of direct materials costs, determine the inventory’s direct labor costs and its overhead costs.

Moonrise Bakery applies factory overhead based on direct labor costs. The company incurred the following costs during the year: direct materials costs. $650,000: direct labor costs.$3,000,000; and factory overhead costs applied $1,800,000.

1. Determine the company's predetermined overhead rate for the year.

2. Assuming that the company's$71,000 ending Work in Process Inventory account for the year had $20,000 of direct labor costs. determine the inventory's direct materials costs.