Lubricants, Inc., produces a special kind of grease that is widely used by race
ID: 2341539 • Letter: L
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:
Work in Process—Refining Department
The March 1 work in process inventory in the Refining Department consists of the following elements: materials, $9,000; direct labor, $4,200; and overhead, $20,100.
Costs incurred during March in the Blending Department were: materials used, $46,000; direct labor, $17,100; and overhead cost applied to production, $114,000.
Prepare journal entries to record the costs incurred in both the Refining Department and Blending Department during March. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
Manufacturing overhead costs for the entire factory were incurred, $656,000. (Credit Accounts Payable.)
Units that were complete with respect to processing in the Refining Department were transferred to the Blending Department, $622,000.
Units that were complete with respect to processing in the Blending Department were transferred to Finished Goods, $710,000.
Completed units were sold on account, $1,360,000. The Cost of Goods Sold was $670,000.
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 account is given in the above question data.)
After posting the entries to the T-accounts, find the ending balance in the inventory accounts and the manufacturing overhead account.
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 33,300 Completed and transferredto Blending ? Materials 146,600 Direct labor 80,200 Overhead 484,000 March 31 balance ?
The March 1 work in process inventory in the Refining Department consists of the following elements: materials, $9,000; direct labor, $4,200; and overhead, $20,100.
Costs incurred during March in the Blending Department were: materials used, $46,000; direct labor, $17,100; and overhead cost applied to production, $114,000.
Required: 1.Prepare journal entries to record the costs incurred in both the Refining Department and Blending Department during March. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
a. Raw materials were issued for use in production. b. Direct labor costs were incurred. c.Manufacturing overhead costs for the entire factory were incurred, $656,000. (Credit Accounts Payable.)
d. Manufacturing overhead cost 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, $622,000.
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, $1,360,000. The Cost of Goods Sold was $670,000.
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 account is given in the above question data.)
Raw materials $ 205,600 Work in process—Blending Department $ 42,000 Finished goods $ 23,000After posting the entries to the T-accounts, find the ending balance in the inventory accounts and the manufacturing overhead account.
Explanation / Answer
1a Work in Process - Refining Department $146,600 Work in Process - Blending Department $46,000 To Raw Materials $192,600 (Being raw materials used for production) b Work in Process - Refining Department $80,200 Work in Process - Blending Department $17,100 To Labor costs $97,300 (Being Labor costs incurred) c Manufacturing overhead $656,000 To Accounts Payable $656,000 (Being manufacturing overhead incurred) d Work in Process - Refining Department 484000 Work in Process - Blending Department 114000 To Manufacturing overhead $598,000 (Being manufacturing overhead applied) e Work in process - Blending Department $622,000 To Work in Process - Refining Department $622,000 (Being units transferred from refining to Blending) f Finished Goods $710,000 To Work in process - Blending Department $710,000 (Being units completed transferred to finished goods) g Accounts Receivable $1,360,000 To Sales $1,360,000 (Being goods sold on account) Cost of Goods Sold $670,000 To Finished Goods $670,000 (Being cost of goods sold recorded) Work in Process (Refining Department) Debit Credit Bal 33300 e $622,000 a $146,600 b $80,200 d $484,000 Bal 122100 744100 744100 Work in Process (Blending Department) Bal 42000 f $710,000 a $46,000 b $17,100 d $114,000 e $622,000 Bal 131100 841100 $841,100 Manufacturing overhead c $656,000 d $598,000 Bal 58000 $656,000 $656,000 Finished Goods Bal $23,000 g $670,000 f $710,000 Bal 63000 $733,000 $733,000 Sales g $1,360,000 Bal $1,360,000 $1,360,000 $1,360,000 Cost of Goods sold g $670,000 Bal $670,000 $670,000 $670,000 Raw Materials Bal $205,600 a $192,600 Bal 13000 $205,600 $205,600
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