Lubricants, Inc., produces a special kind of grease that iswidely used by race car drivers. The grease is produced in twoprocessing departments—Refining and Blending. Raw materials areintroduced at various points in the Refining Department.
The following incomplete Work in Process account is availablefor the Refining Department for March:
| Work in Process—Refining Department |
| March 1 balance | 34,700 | Completed and transferred
to Blending | ? |
| Materials | 152,600 | | |
| Direct labor | 77,200 | | |
| Overhead | 490,000 | | |
| March 31 balance | ? | | |
The March 1 work in process inventory in the Refining Departmentconsists of the following elements: materials, $8,700; directlabor, $4,300; and overhead, $21,700.
Costs incurred during March in the Blending Department were:materials used, $46,000; direct labor, $17,000; and overhead costapplied to production, $103,000.
Required:
1. Prepare journal entries to record the costsincurred in both the Refining Department and Blending Departmentduring March. Key your entries to the items (a) through (g)below.
- Raw materials used in production.
- Direct labor costs incurred.
- Manufacturing overhead costs incurred for the entire factory,$646,000. (Credit Accounts Payable.)
- Manufacturing overhead was applied to production using apredetermined overhead rate.
- Units that were complete with respect to processing in theRefining Department were transferred to the Blending Department,$672,000.
- Units that were complete with respect to processing in theBlending Department were transferred to Finished Goods,$800,000.
- Completed units were sold on account, $1,430,000. The Cost ofGoods Sold was $630,000.
2. Post the journal entries from (1) above to T-accounts. Thefollowing account balances existed at the beginning of March. (Thebeginning balance in the Refining Department’s Work in Process isgiven in the T-account shown above.)
| | |
| Raw materials | $ | 207,600 |
| Work in process—Blending Department | $ | 45,000 |
| Finished goods | $ | 18,000 |
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