Loose Leaf for Fundamental Accounting Principles
Loose Leaf for Fundamental Accounting Principles
23rd Edition
ISBN: 9781259687709
Author: John J Wild, Ken Shaw Accounting Professor, Barbara Chiappetta Fundamental Accounting Principles
Publisher: McGraw-Hill Education
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Chapter 19, Problem 1GLP
To determine

Product Cost:

The cost incurred on the production of a particular job or product is called product cost. The cost in production of a product usually involves raw material used, direct labor used and manufacturing overhead applied. It is recorded by debiting the work in process account for all the cost and crediting the raw material inventory account, wages payable account and manufacturing overhead.

To determine:

Prepare journal entries to record the cost of jobs and their flow through manufacturing environment.

Preparation of schedule of cost of goods manufactured and partial income statement

Expert Solution & Answer
Check Mark

Answer to Problem 1GLP

Solution:

1.

Accounts name Debit Credit
Raw Materials Inventory $500,000  
Accounts Payable   $500,000
     
Work in Process Inventory $455,000  
Raw Material Inventory   $455,000
     
Work in Process Inventory $340,000  
Cash   $340,000
     
Work in Process Inventory $170,000  
Manufacturing Overhead   $170,000
     
Manufacturing Overhead $50,000  
Raw Materials Inventory   $50,000
     
Manufacturing Overhead $23,000  
Cash   $23,000
     
Manufacturing Overhead $32,000  
Cash   $32,000
     
Manufacturing Overhead $19,000  
Cash   $19,000
     
Manufacturing Overhead $51,000  
Accumulated Depreciation – Factory
Equipment
  $51,000
     
Finished Goods Inventory $828,500  
Work in Process Inventory   $828,500
     
Cost of Goods Sold $321,500  
Finished Goods Inventory   $321,500
     
Cash $635,000  
Sales   $635,000
     
Cost of Goods Sold $5,000  
Manufacturing Overhead   $5,000

2.

MARCELINO COMPANY
Schedule of Cost of Goods Manufactured
For Month Ended April 30
Direct Materials used $455,000
Direct Labor used $340,000
Manufacturing Overhead Applied $170,000
Total Manufacturing costs $965,000
   
Add: Beginning balance of Work in Process on March 31 $121,000
Total cost of Work in Process $1,086,000
Less : Ending balance of Work in Process on April 30 $257,500
   
Cost of Goods Manufactured $828,500

3.

MARCELINO COMPANY
Partial Income Statement
For Month Ended April 30
Sales $635,000
Less: Cost of Goods Sold ($321,500 + $5,000) $326,500
Gross Profit $308,500

Explanation of Solution

Explanation:

Computation of Production of Cost

  Job 306 Job 307 Job 308 Total
March 31        
Direct Materials $29,000 $35,000   $64,000
Direct Labor $20,000 $18,000   $38,000
Overhead Applied $10,000 $9,000   $19,000
Beginning goods in process $59,000 $62,000 0 $121,000
         
During April        
Direct Materials $135,000 $220,000 $100,000 $455,000
Direct Labor $85,000 $150,000 $105,000 $340,000
Overhead Applied $42,500 75,000 $52,500 $170,000
  $262,500 $445,000 $257,400 $965,000
Total Cost (April 30) $321,500 $507,000 $257,500 $1,086,000
  Finished
(sold )
Finished
(Unsold)
In Process  

Computation of Overhead Applied Applied Overhead Job (306) = 50% of Direct labor cost                                              = 0.50 X $85,000                                              = $42,500 Applied Overhead Job (307) = 50% of Direct labor cost                                              = 0.50 X $150,000                                              = $75,000 Applied Overhead Job (308) = 50% of Direct labor cost                                              = 0.50 X $105,000                                              = $52,500 Total Applied Overhead Cost = $42,500 + $75,000 + $52,500                                                = $170,000

Actual Overhead Cost incurred = $50,000 + $23,000 + $32,000 + $19,000 + $51,000                                                   = $175,000 Underapplied Overhead Cost = Actual Overhead Cost  Applied Overhead Cost                                               = $175,000  $170,000                                               = $5,000

Cost of Goods Sold= Production Cost (Job 306) + Underapplied Overhead Cost                                 = $321,500 + $5,000                                 = $326,500

Conclusion

Conclusion:

Hence it is concluded that the Marcelino Co. has completed jobs worth $828,500 (306 & 307) and transfer to finished goods inventory. Job 306 with cost of goods sold of $326,500 was sold on cash for $635,000 and earned gross profit of $308,500.

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Chapter 19 Solutions

Loose Leaf for Fundamental Accounting Principles

Ch. 19 - Prob. 11DQCh. 19 - Prob. 12DQCh. 19 - Prob. 13DQCh. 19 - Prob. 14DQCh. 19 - Prob. 1QSCh. 19 - Prob. 2QSCh. 19 - Prob. 3QSCh. 19 - Prob. 4QSCh. 19 - Prob. 5QSCh. 19 - Prob. 6QSCh. 19 - Prob. 7QSCh. 19 - Prob. 8QSCh. 19 - Prob. 9QSCh. 19 - Manufacturing cost flows P1 P2 P3 Refer to the...Ch. 19 - Prob. 11QSCh. 19 - Prob. 12QSCh. 19 - Prob. 13QSCh. 19 - Prob. 14QSCh. 19 - Prob. 15QSCh. 19 - Prob. 1ECh. 19 - Prob. 2ECh. 19 - Prob. 3ECh. 19 - Prob. 4ECh. 19 - Prob. 5ECh. 19 - Prob. 6ECh. 19 - Prob. 7ECh. 19 - Prob. 8ECh. 19 - Prob. 9ECh. 19 - Prob. 10ECh. 19 - Prob. 11ECh. 19 - Prob. 12ECh. 19 - Prob. 13ECh. 19 - Prob. 14ECh. 19 - Prob. 15ECh. 19 - Prob. 16ECh. 19 - Prob. 17ECh. 19 - Exercise 19-18 Job order costing for services A1...Ch. 19 - Prob. 19ECh. 19 - Prob. 20ECh. 19 - Problem 19-1A Production costs computed and...Ch. 19 - Prob. 2APSACh. 19 - Problem 19-3A Source documents, journal entries,...Ch. 19 - Problem 19-4A Overhead allocation and adjustment...Ch. 19 - Prob. 5APSACh. 19 - Prob. 1BPSBCh. 19 - Prob. 2BPSBCh. 19 - Prob. 3BPSBCh. 19 - Prob. 4BPSBCh. 19 - Prob. 5BPSBCh. 19 - The computer workstation furniture manufacturing...Ch. 19 - Prob. 1GLPCh. 19 - BTN 19-1 Manufacturers and merchandisers can apply...Ch. 19 - Prob. 2BTNCh. 19 - Assume that your company sells portable housing to...Ch. 19 - Prob. 4BTNCh. 19 - Prob. 5BTNCh. 19 - Prob. 6BTNCh. 19 - Refer to the chapter opener regarding Neha Assar...Ch. 19 - Prob. 8BTNCh. 19 - Apple and Samsung are competitors in the global...
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