Lubricants, Inc., produces a special kind of grease that is widely used by race
ID: 2421266 • 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:
The March 1 work in process inventory in the Refining Department consists of the following elements: materials, $8,900; direct labor, $3,900; and overhead, $21,500.
Costs incurred during March in the Blending Department were: materials used, $46,000; direct labor, $17,800; and overhead cost applied to production, $116,000.
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, $686,000. (Credit Accounts Payable.)
Units that were complete with respect to processing in the Refining Department were transferred to the Blending Department, $662,000.
Units that were complete with respect to processing in the Blending Department were transferred to Finished Goods, $800,000.
Completed units were sold on account, $1,380,000. The Cost of Goods Sold was $610,000.
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 above.)
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:
Explanation / Answer
Work in Process—Refining Department March 1 balance 34,300 Completed and transferred 743100 to Blending Materials 156,600 Direct labor 65,200 Overhead 487,000 March 31 balance 743100 Journal Debit Credit Work in process 156,600 Raw material 156,600 Direct Labor 3900 Wages payable 3900 Manufacturing overhead costs 686,000 Accounts Payable 686,000 Blending dept 662,000 Refining Dept 662,000 Finished goods 800,000 Blending dept 800,000 Accounts receivable 1380000 sales 1380000 Cost of goods sold 610000 Finished goods 610000
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