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 Work in Process-Refining Department 32,600 Completed and transferred to Blending 155,600 69,200 481,000 Materials Direct labor Overhead March 31 balance The March 1 work in process inventory in the Refining Department consists of the following elements: materials, $7,800; direct labor, $4,300; and overhead, $20,500. Costs incurred during March in the Blending Department were: materials used, $44,000; direct labor, $16,100; and overhead cost applied to production, $110,000. 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, $636,000. (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, $692,000. f. Units that were complete with respect to processing in the Blending Department were transferred to Finished Goods, $710,000. g. Completed units were sold on account, $1,410,000. The Cost of Goods Sold was $600,000.

Answer 1

Weighted-Average Method:

1.

a.	Work in Process—Refining Department	155,600
	Work in Process—Blending Department	44,000
	Raw Materials		199,600
b.	Work in Process—Refining Department	69,200
	Work in Process—Blending Department	16,100
	Salaries and Wages Payable		85,300
c.	Manufacturing Overhead	636,000
	Accounts Payable		636,000
d.	Work in Process—Refining Department	481,000
	Manufacturing Overhead		481,000
d.	Work in Process—Blending Department	110,000
	Manufacturing Overhead		110,000
e.	Work in Process—Blending Department	692,000
	Work in Process—Refining Department		692,000
f.	Finished Goods	710,000
	Work in Process—Blending Department		710,000
g.	Accounts Receivable	1,410,000
	Sales		1,410,000
	Cost of Goods Sold	600,000
	Finished Goods		600,000

2.

Accounts Receivable	Raw Materials
(g)	1,410,000			Bal.	210,600	(a)	199,600
				Bal.	11,000
Work in Process Refining Department	Work in Process Blending Department
Bal.	32,600	(e)	692,000	Bal.	53,000	(f)	710,000
(a)	155,600			(a)	44,000
(b)	69,200			(b)	16,100
(d)	481,000			(d)	110,000
Bal.	46,400			(e)	692,000
				Bal.	205,100
Finished Goods	Manufacturing Overhead
Bal.	13,000	(g)	600,000	(c)	636,000	(d)	591,000
(f)	710,000			Bal.	45,000
Bal.	123,000
Accounts Payable	Salaries and Wages Payable
		(c)	636,000			(b)	85,300
Sales	Cost of Goods Sold
		(g)	1,410,000	(g)	600,000