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Item 3

Item 3 6.68 points

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	33,600	Completed and transferred to Blending	?
Materials	145,600
Direct labor	67,200
Overhead	480,000
March 31 balance	?

The March 1 work in process inventory in the Refining Department consists of the following elements: materials, $8,700; direct labor, $4,800; and overhead, $20,100.

Costs incurred during March in the Blending Department were: materials used, $46,000; direct labor, $16,300; and overhead cost applied to production, $111,000.

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.

1. Raw materials used in production.
2. Direct labor costs incurred.
3. Manufacturing overhead costs incurred for the entire factory, $656,000. (Credit Accounts Payable.)
4. Manufacturing overhead was applied to production using a predetermined overhead rate.
5. Units that were complete with respect to processing in the Refining Department were transferred to the Blending Department, $662,000.
6. Units that were complete with respect to processing in the Blending Department were transferred to Finished Goods, $750,000.
7. Completed units were sold on account, $1,350,000. The Cost of Goods Sold was $640,000.

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	$	208,600
Work in process—Blending Department	$	54,000
Finished goods	$	23,000

Answer 1

را Debit credit Fransactions General Journal Work in proces- Refining Department $145,600 work in Process- blending Department $ 46,000 Raw Materials $191,600 (to record issuance of raw materials b. Work in Process - Refining Department $67,200 Work in Process - Blending Department $16,300 Salaries and wages Payable to second disect labor cost incurredy 83,500 Manufacturing Overhead $656,000 Accounts Payable $656,000 (to recond manufacturing expenses) d (1) Work in Process - Refining Department $400,000 Manufacturing Overhead $480,000 to second overhead cost appliedy d (2) Work in Process- Blending Department $111,000 $111.000 to sewad overhead cost applied) Manufacturing overhead

e. Work in Process-Blending Department $662,000 Work in Process - Refining Department He second transfer of semifinished unity 1662,000 of finished Goods $750,000 work in Process - Blending Department $750,000 (to second trenifer of completed units) (4) Accounts Receivable Sales Yo record sales on account) $1,350,000 41,350,000 g(2) Cost of Goods Hold finished Goods to second cost of goods sold) $640,000 $640,000 code Accounts Receivable Egs gs $1,350,000 200 Raw Materials Beg Bal. $200,600 (as $191,600 End. Bat. 1 $ 17,000

Work in Process Refining Department Beg Bal $33,600 fas $145,600 Les $662,000 ( $ 67,200 (d, $480,ooo Work in Proces Blending Department Beg Bal- $54,000 $46,000 its $750,000 iby $ 16,300 (d, $ 111,000 $662,000 la رط les End. Bal. $64,400 End Bal: $139,300 finished Goods Beg bal. $23,000 $750,000 (gs $ 640,000 Manufacturing Overhead $656,0001d) $591,000 Endi Bal $65,000 End. Bal. $ 133,00 ol Salaries and wages Payable Accounts Payable ist ( $656,000 b $ 83,500 Cost of Goods hold Sales igs $1,350,000 tigs & 640,000 calculation: (d) Manufacturing Overhead = (Manufacturing Overhead Refining Department & Manufacturing Overhead Bleading Department) $400,000 of $ 111,000 = $591,000