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: March 1 balance Work in process-Refining Department 33,100 Completed and transferred to Blonding 148,680 65,200 479,000 ipped Materials Direct labor Overhead March 31 balance The March 1 work in process inventory in the Refining Department consists of the following elements: materials. $9,000, direct labor $3.700, and overhead, $20,400 Costs incurred during March in the Blending Department were materials used, $46,000, direct labor $17,700, and overhead cost applied to production, $115,000 Terences Required: 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, $686,000. (Credit Accounts Payable.) d. Manufacturing overhead 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, $652.000 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 $680,000 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.) Raw materials work in process-Blending Department Finished goods $213. $ 56,000 $ 27,000

Answer 1

Lubricants, Inc. Requirement 1 a. Raw materials used in production. Work in Process - Refining Dept Work in Process - Blending Dept Raw Materials 148600 46000 194600 b. Direct labor costs incurred. Work in Process - Refining Dept Work in Process - Blending Dept Salaries and Wages Payable 65200 17700 82900 686000 c. Manufacturing overhead costs incurred for the entire factory, Manufacturing Overhead 686000 Accounts Payable 686000 d. Manufacturing overhead was applied to production using a predetermined overhead rate Work in Process - Refining Dept 479000 Work in Process - Blending Dept 115000 Manufacturing Overhead 594000 e. Units that were complete with respect to processing in the Refining Department were transferred to the Blending Department, Work in Process - Blending Dept 652000 Work in Process - Refining Dept 652000 f. Units that were complete with respect to processing in the Blending Department were transferred to Finished Goods, Finish goods 750000 Work in Process - Blending Dept 750000 1380000 The Cost of Goods Sold g. Completed units were sold on account, Accounts Recivable 1380000 Sales Cost of Goods Sold 680000 Finished Goods 1380000 680000

Requirement 2 Raw materials Work in process-Blending Dept Finished goods 213600 56000 27000 Accounts Receivable 1380000 (g) Raw Materials 213600 19000 Bal. Bal. 194600 (a) Bal. Work in Process Refining Dept Bal. 33100 652000 (e) (a) 148600 (b) 65200 (d) 479000 Bal. 73900 Work in Process Blending Dept 56000 750000 (f) (a) 46000 (b) 17700 (d) 115000 ('e) 652000 Bal. 136700 Bal. Finished Goods 27000 680000 (g) 750000 97000 Manufacturing Overheade 686000 594000 (d) 92000 Bal. Bal. Accounts Payable 686000 (c) Salaries and Wages Payable 82900 (b) Sales Cost of Goods Sold 680000 1380000 (8)