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: 10 points March 1 balance eBook Work in Process-Refining Department 31,000 Completed and transferred to Blending 139,600 71,200 484,000 Print Materials Direct labor Overhead March 31 balance References The March 1 work in process inventory in the Refining Department consists of the following elements: materials, $7,400; direct labor, $3,100; and overhead, $20,500. Costs incurred during March in the Blending Department were: materials used, $46,000; direct labor, $16,100; and overhead cost applied to production, $118,000. 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, $652,000. f. Units that were complete with respect to processing in the Blending Department were transferred to Finished Goods, $760,000. g. Completed units were sold on account, $1,420,000. The Cost of Goods Sold was $660,000.

Answer 1

	Account Titles	Debit	Credit
a	Work in Process - Refining Department	$   1,39,600
	Work in Process - Blending Department	$       46,000
	Raw Material Inventory		$   1,85,600
	(Raw material issued to production)
b	Work in Process - Refining Department	$       71,200
	Work in Process - Blending Department	$       16,100
	Salaries and Wages Payable		$       87,300
	(Direct labor cost)
c	Manufacturing Overhead	$   7,06,000
	Accounts Payable		$   7,06,000
	(Manufacturing Overhead incurred)
d	Work in Process - Refining Department	$   4,84,000
	Work in Process - Blending Department	$   1,18,000
	Wages Payable / Cash		$   6,02,000
	(Allocation of manufacturing overhead)
e	Work in Process - Blending Department	$   6,52,000
	Work in Process - Refining Department		$   6,52,000
	(Units transferred to blending department)
f	Finished Goods Inventory	$   7,60,000
	Work in Process - Blending Department		$   7,60,000
	(Units transferred to finished goods)
g	Accounts Receivable	$ 14,20,000
	Sales Revenue		$ 14,20,000
	(Sales made on account)
	Cost of Goods Sold	$   6,60,000
	Finished Goods Inventory		$   6,60,000
	(Cost of goods sold recorded)

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