Lubricants, Inc., produces a special kind of grease that is widely used by race

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:

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 materlals are Introduced at various points In the Refining Department. The followIng Incomplete Work In Process account Is avallable for the Refining Department for March: Work in Process-Refining Department March 1 balance Completed and transferred to Blending Materials Direct labor Overhead March 31 balance 145,68e 74,288 473,80 The March 1 work In process Inventory In the Refining Department consists of the following elements: materlals, $7,300; direct labor, $5,000; and overhead, $21,700. Costs Incurred during March In the Blending Department were: materlals used, $45,000: direct labor, $17100; and overhead cost applied to production, $108,000. Requlrec 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, $666,000. (Credit Accounts Payable.) d. Manufacturing overhead was applied to production using a predetermined overhead rate e. Units that were complete wlth respect to processing in the Refining Department were transferred to the Blending Department, $652,000. Units that were complete with respect to processing in the Blending Department were transferred to Finished Goods?$790,000. g. Completed units were sold on account, $1,310,000. The Cost of Goods Sold was $630,000 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.)

Explanation / Answer

Answer 1.: Weighted Average Method Journal Entry Date Particulars Dr. Amt. Cr. Amt. a. WIP- Refining Department 145600 WIP- Blending Department 45000 Raw Materials 190600 (record the raw materials used in production) b. WIP- Refining Department 74200 WIP- Blending Department 17100 Salaries & Wages Payable 91300 (record the direct labor incurred) c. Manufacturing Overhead 666000 Accounts Payable 666000 (Record the manufacturing overhead incurred) d. WIP- Refining Department 473000 WIP- Blending Department 108000 Manufacturing Overhead 581000 (record the maufactuing overhead applied) e. WIP - Blending Department 652000 WIP - Refining Department 652000 (record the WIP completed in refining department transf. to Blending Departent) f. Finished Goods Inventory 790000 WIP - Blending Department 790000 (record the goods completed) g-1. Accounts Receivable 1310000 Sales 1310000 (recor the goods sold) g-2. Cost o Goods Sold 630000 Finished Goods Inventory 630000 (Record the cost of goods sold WIP - Refining Department Mar 1 Balance 34000 Completed & Trafr. to Blending € 652000 Materials (a) 145600 Direct Labor (b) 74200 Overhead (d) 473000 Mar 31, Balance 74800 WIP - Blending Department Mar 1 Balance 47000 Finished goods (f) 790000 Materials (a) 45000 Direct Labor (b) 17100 Overhead (d) 108000 WIP - Refinning € 652000 Mar 31, Balance 79100 Raw Materials Mar 1 Balance 207600 WIP - Refining 145600 WIP - Blending 45000 Mar 31, Balance 17000 Finished Goods Mar 1 Balance 22000 Cost of Goods Sold (g-2) 630000 WIP - Blending (f) 700000 Mar 31, Balance 92000

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