Lubricants, Inc., produces a special kind of grease that is widely used by race
ID: 2341767 • 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
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, $636,000. (Credit Accounts Payable.)
Units that were complete with respect to processing in the Refining Department were transferred to the Blending Department, $672,000.
Units that were complete with respect to processing in the Blending Department were transferred to Finished Goods, $750,000.
The March 1 work in process inventory in the Refining Department consists of the following elements: materials, $8,000; direct labor, $3,800; and overhead, $21,800.
Costs incurred during March in the Blending Department were: materials used, $45,000; direct labor, $17,100; and overhead cost applied to production, $110,000.
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 transferredto Blending ? Materials 141,600 Direct labor 71,200 Overhead 485,000 March 31 balance ? 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, $636,000. (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, $672,000.
f.Units that were complete with respect to processing in the Blending Department were transferred to Finished Goods, $750,000.
g. Completed units were sold on account, $1,380,000. The Cost of Goods Sold was $660,000.The March 1 work in process inventory in the Refining Department consists of the following elements: materials, $8,000; direct labor, $3,800; and overhead, $21,800.
Costs incurred during March in the Blending Department were: materials used, $45,000; direct labor, $17,100; and overhead cost applied to production, $110,000.
Explanation / Answer
Transactions General Journal Debit Credit a. Work in process-Refining department 141600 Work in process-Blending department 45000 Raw Materials 186600 (To record direct materials used in production) b. Work in process-Refining department 71200 Work in process-Blending department 17100 Salaries and Wages payable 88300 (To record direct labor costs incurred) c. Manufacturing overhead 636000 Accounts Payable 636000 (To record manufacturing overhead incurred) d. Work in process-Refining department 485000 Work in process-Blending department 110000 Manufacturing overhead 595000 (To record manufacturing overhead applied) e. Work in process-Blending department 672000 Work in process-Refining department 672000 (To record transfers from Refining to Blending department) f. Finished goods 750000 Work in process-Blending department 750000 (To record goods completed and transferred to finished goods) g.(1) Accounts receivable 1380000 Sales 1380000 (To record sales on account) g.(2) Cost of goods sold 660000 Finished goods 660000 (To record cost of sales)
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