Assignment
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:
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Work in Process-Refining Department
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March 1 balance
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32,600
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Completed and transferred to Blending
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?
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Materials
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145,600
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Direct labor
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75,200
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Overhead
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473,000
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March 31 balance
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?
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The March 1 work in process inventory in the Refining Department consists of the following elements: materials, $7,500; direct labor, $3,700; and overhead, $21,400.
Costs incurred during March in the Blending Department were: materials used, $45,000; direct labor, $17,300; and overhead cost applied to production, $108,000.
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.)
Manufacturing overhead costs incurred for the entire factory, $646,000. (Credit Accounts Payable.)
Manufacturing overhead was applied to production using a predetermined overhead rate.
Units that were complete with respect to processing in the Refining Department were transferred to the Blending Department, $632,000.
Units that were complete with respect to processing in the Blending Department were transferred to Finished Goods, $730,000.
Completed units were sold on account, $1,330,000. The Cost of Goods Sold was $590,000.
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Raw materials
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$ 205,600
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Work in process-Blending Department
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$ 40,000
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Finished goods
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$ 29,000
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2. Post the journal entries 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.)