Question

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: March 1 balance Work in Process-Refining Department 33,000 Completed and transferred to Blending 154,600 74.200 491,000 Materials Direct labor Overhead March 31 balance The March 1 work in process inventory in the Refining Department consists of the following elements: materials, $8,200; direct labor, $3,200, and overhead, $21,600. Costs incurred during March in the Blending Department were: materials used, $45,000; direct labor, $16,700; and overhead cost applied to production, $101,000. 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, $696,000. (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, $740,000. g. Completed units were sold on account, $1,460,000. The Cost of Goods Sold was $630,000. 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 $ 20B, 600 $ 56,000 $ 26,000

Please answer all parts. Thank you!

Answer 1

Date	Account Titles & Explanations	Debit	Credit
a	work in process-refining department	154600
	work in process-blending department	45000
	Raw materials		199600
	(raw materials issued for production)
b	work in process-refining department	74200
	work in process-blending department	16700
	salaries & wages payable		90900
	(direct labor costs incurred)
c	manufacturing overhead	696000
	accounts payable		696000
	(overheads incurred for the factory)
d	work in process-refining department	481000
	work in process-blending department	101000
	manufacturing overhead		582000
	(overhead applied at predetermined rate)
e	work in process-blending department	652000
	work in process-refining department		652000
	(transfer of units on completion)
f	finished goods	740000
	blending department		740000
g	cost of goods sold	630000
	finished goods		630000
	(COGS of goods sold)

Raw Material Inventory
1-Mar	Bal B/f	208,600	WIP-Refining department	154600
			WIP-Blending department	45000
			EndingBalance	9,000
		208,600		208,600
Work in Process-Refining
1-Mar	Bal B/f	33000	Mar 31 WIP-Blending	652000
	Raw material	154600	Ending balance	90800
	Salaries & Wages payable	74200
	Manufacturing OH	481000
		742800		742800
Finished goods
1-Mar	Bal B/f	26000	Cost of Goods Sold	630000
	Transfer from blending	740000	Ending Bal	136000
		766000		766000
Work in Process-Blending department
March	Bal B/f	56000	Mar 31 Finished Goods	740000
	Raw Material	45000	Ending balance	130700
	Salaries & Wages payable	16700
	Manufacturing OH	101000
	Transfer from WIP-Refining	652000
		870700		870700
Manufacturing Overhead
	Accounts payable	696000	WIP-Refining	481000
			WIP-Blending	101000
			Ending balance	114000
		696000		696000