Problem 4-17 Cost Flows [LO 4-1]
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:
Work in Process—Refining Department | |||
March 1 balance | 31,800 |
Completed and transferred to Blending |
? |
Materials | 137,600 | ||
Direct labor | 80,200 | ||
Overhead | 479,000 | ||
March 31 balance | ? |
The March 1 work in process inventory in the Refining Department consists of the following elements: materials, $8,400; direct labor, $3,200; and overhead, $20,200.
Costs incurred during March in the Blending Department were: materials used, $45,000; direct labor, $17,400; and overhead cost applied to production, $109,000.
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.
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 | $ | 212,600 |
Work in process—Blending Department | $ | 53,000 |
Finished goods | $ | 23,000 |
Solution 1:
Journal Entries - Lubricants Inc. | |||
Event | Particulars | Debit | Credit |
a | Work In Process - Refining department Dr | $137,600.00 | |
Work In Process - Blending department Dr | $45,000.00 | ||
To Raw material inventory | $182,600.00 | ||
(To record material used in production) | |||
b | Work In Process - Refining department Dr | $80,200.00 | |
Work In Process - Blending department Dr | $17,400.00 | ||
To Wages Payable | $97,600.00 | ||
(To record direct labor cost incurred) | |||
c | Manufacturing overhead Dr | $626,000.00 | |
To Accounts Payable | $626,000.00 | ||
(To record manufacturing overhead incurred) | |||
d | Work In Process - Refining department Dr | $479,000.00 | |
Work In Process - Blending department Dr | $109,000.00 | ||
To Manufacturing overhead | $588,000.00 | ||
(To apply manufacturing overhead) | |||
e | Work In Process - Blending department Dr | $652,000.00 | |
To Work In Process - Refining department | $652,000.00 | ||
(Being units completed in refining transferred to Blending) | |||
f | Finished goods inventory Dr | $790,000.00 | |
To Work In Process - Blending department | $790,000.00 | ||
(Being units completed in blending transferred to finished goods) | |||
g1 | Accounts receivables Dr | $1,360,000.00 | |
To Sales Revenue | $1,360,000.00 | ||
(To record sales on account) | |||
g2 | Cost of goods sold Dr | $690,000.00 | |
To Finished goods inventory | $690,000.00 | ||
(To record cost of goods sold) |
Solution 2:
Raw materials inventory | |||
Particulars | Debit | Particulars | Credit |
March 1 balance | $212,600.00 | Material used | $182,600.00 |
March 31, balance | $30,000.00 | ||
Work In Process - Refining | |||
Particulars | Debit | Particulars | Credit |
March 1 balance | $31,800.00 | Completed and transferred to Blending | $652,000.00 |
Material | $137,600.00 | ||
Direct labor | $80,200.00 | ||
Overhead | $479,000.00 | ||
March 31, balance | $76,600.00 | ||
Work In Process - Blending | |||
Particulars | Debit | Particulars | Credit |
March 1 balance | $53,000.00 | Completed and transferred to Finished Goods | $790,000.00 |
Transferred from Refining | $652,000.00 | ||
Material | $45,000.00 | ||
Direct labor | $17,400.00 | ||
Overhead | $109,000.00 | ||
March 31, balance | $86,400.00 | ||
Finished Goods Inventory | |||
Particulars | Debit | Particulars | Credit |
March 1 balance | $23,000.00 | Cost of goods sold | $690,000.00 |
Transferred from Blending | $790,000.00 | ||
March 31, balance | $123,000.00 | ||
Manufacturing overhead | |||
Particulars | Debit | Particulars | Credit |
Overhead incurred | $626,000.00 | Overhead applied | $588,000.00 |
March 31, balance | $38,000.00 | ||
Cost of goods sold | |||
Particulars | Debit | Particulars | Credit |
Finished goods inventory | $690,000.00 | ||
March 31, balance | $690,000.00 | ||
Sales Revenue | |||
Particulars | Debit | Particulars | Credit |
Accounts receivables | $1,360,000.00 | ||
March 31, balance | $1,360,000.00 |
Problem 4-17 Cost Flows [LO 4-1] Lubricants, Inc., produces a special kind of grease that is...
Problem 4-17 Cost Flows [LO 4-1] 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: Work in Process-Refining Department Completed and transferred to Blending March 1 balance Materials Direct labor Overhead 32,400 156,600 77,200 478,000 March...
Problem 5-17 Cost Flows [LO 5-1] 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: Work in Process—Refining Department March 1 balance 38,000 Completed and transferred to Blending ? Materials 495,000 Direct labor 72,000 Overhead 181,000 March...
Problem 4-17 Cost Flows (LO 4-1) 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: Work in Process-Refining Department Completed and transferred to Blending March 1 balance Materials Direct labor Overhead 32.400 139,600 68,200 489,000 March...
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: Work in Process—Refining Department March 1 balance 32,600 Completed and transferred to Blending ? Materials 146,600 Direct labor 76,200 Overhead 480,000 March 31 balance ? The March 1...
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: Work in Process—Refining Department March 1 balance 31,500 Completed and transferred to Blending ? Materials 139,600 Direct labor 79,200 Overhead 483,000 March 31 balance...
Problem 5-17 Cost Flows [LO 5-1] 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: Work in Process-Refining Department March 1 balance 38.000 Completed and transferred to Blonding Materials 495.000 Direct Labor 72,000 Overhead 181,000 March 31...
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...
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 38,000 Completed and transferred to Blending 495,000 72.000 181,000 The March 1 work in...
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: Work in Process-Refining Department March 1 balance 32,400 Completed and transferred to Blending Materials 141,600 Direct labor 7 4,200 Overhead 489,000 March 31 balance ? The March 1...
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: Work in Process—Refining Department March 1 balance 33,200 Completed and transferred to Blending ? Materials 150,600 Direct labor 79,200 Overhead 474,000 March 31 balance ? The March 1...