Question

Lubricants, Inc., produces a special kind of grease that is widely used by race car drivers. The grease is produced in two processing departments-Refining and Blending. Raw materials are introduced at various points in the Refining Department. The following incomplete Work in Process account is available for the Refining Department for March: March 1 balance Materials Direct labor Overhead March 31 balance Work in Process-Refining Department 34,900 Completed and transferred to Blending 148,600 81,200 472.000 The March 1 work in process inventory in the Refining Department consists of the following elements: materials, $8,800, direct labor, $4.400; and overhead, $21,700. Costs incurred during March in the Blending Department were: materials used, $44,000; direct labor, $16,300; and overhead cost applied to production, $100,000. Required: 1. Prepare journal entries to record the costs incurred in both the Refining Department and Blending Department during March. Key your entries to the items (a) through (g) below. a. Raw materials used in production, b. Direct labor costs incurred. c. Manufacturing overhead costs incurred for the entire factory, $706,000. (Credit Accounts Payable.) d. Manufacturing overhead was applied to production using a predetermined overhead rate. e. Units that were complete with respect to processing in the Refining Department were transferred to the Blending Department, $622,000. 1. Units that were complete with respect to processing in the Blending Department were transferred to Finished Goods, $770,000. g. Completed units were sold on account, $1.420,000. The Cost of Goods Sold was $610,000. 2. Post the journal entries from (1) above to T-accounts. The following account balances existed at the beginning of March. (The beginning balance in the Refining Department's Work in Process is given in the T-account shown above.) Raw materials Work in process-Blending Department Finished goods $ 213,600 $ 55, eee $ 27,000

Answer 1

Transaction Journal Credit General Journal Debit Work in Process - Refining Department & 148,600 Work in Process - Blending Department & 44,000 Raw materials (To record Issuance of raw materials) $ 192,600 Work in Process- Refining Department $ 81, 200 Work in Process - Blending Department $ 16,300 Salaries and wages Payable [to secesd direct labor cost incurredo $97,500 Manufacturing over read $ 706,000 Accounts Payable (to record manufacturing expenses) $ 706,000 $472,000 d(1) Work in Process- Refining Department Manufacturing overhead (lo second overhead cost applied) $ 472,000 Id(2) work in Process - Blending Department $100,000 Manufacturing over head to record overhead cost applied)! $100,000

Work in Process - Blending Department $622,000 Work in Process-Refining Department Ito second transfer of vemi finished units) $622,000 f finished Goods $770,000 Work in Process - Blending Department (To second transfer of completed units) $770,000 91) $1,420,000 Accounts Receivable Sales Leo record sales) $1,420,000 912) $610,000 Cost of Goods Sold finished Goods to record cost of goods sold) $600,000 de Accounts Receivable go $1,420,000 Raw Materials Bege Ball & 213,600 a $192,600 - 140 21429000 Endi Bali $21,000

Work in Prous Refining Department Beg. Bel $34,900 as $148,600 e, $622,000 (b) $ 81,200 (d, $472,000 work in Process Blending Department Bege Bal $55,000 (a $ 44,000 ts $770,000 (b) $ 16,300 $100,ooo le $622,000 End. Bal. $ 114,700) End. Bal $67,300 finished Goods. Beg. Bali $27,000 of $770,000 g, $610,000 Manufacturing overhead $706,000 (d, & 572,000 - End: Ball $ 187,000 Endi Bal $134,000 Accounts Payable (cs $706,000 Salaries and wages Payable (b) $ 97,500 Gold Sales 193 $1,420,000 Cost g of Goods $610,000 Calculations (d, Manufacturing overhead = Manufacturing overhead Refining Department & Manufacturing overhead Blending Department) = $ 472,000 & $100,000 = $572,000