Problem: Nature's Way, Inc., Keeps one of its production facilities busy making a perfume called Essence de la Vache. The perfume goes through two processing departments: Blending and Bottling.
The following incomplete Work in Process account is provided for the Blending Department for March:
Work in process-Blending
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March 1 Balance 32,800
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Completed and transferred to bottling
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Materials 147,600
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(760,000 ounces)
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Direct labor 73,200
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Overhead 481,000
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March 31 Balance ?
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The $32,800 beginning inventory in the Blending Department consisted of the following elements: materials, 8,000, direct labor, $4,000, and overhead applied, $20,800.
Costs incurred during March in the Bottling Department were: materials used, $45,000, direct labor, $17,000, and overhead cost applied to production, $108,000.
Required:
1. Prepare journal entries to record the costs incurred in both the Blending Department and Bottling Department during March. Key your entries to items (a) through (g) below:
a. Raw materials were issued for use in production.
b. Direct labor costs were incurred.
c. Manufacturing overhead costs for the entire factory was incurred, $596,000. (Credit Accounts Payable and use a single Manufacturing Overhead control account for the entire factory.)
d. Manufacturing overhead was applied to production using a predetermined overhead rate.
e. Units that were complete with respect to processing in the Bottling Department were transferred to the Bottling Department, $920,000.
f. Units that were complete with respect to processing in the Bottling Department were transferred to Finished Goods, $920,000.
g. Completed units were sold on account for $1,400,000. The cost of goods was $890,000.