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Lubricants, Incorporated, produces a special kind of grease widely used by race car drivers. The grease is produced in two processing departmentsRefining and Blending. Raw

Lubricants, Incorporated, produces a special kind of grease widely used by race car drivers. The grease is produced in two processing departmentsRefining 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:

Work in ProcessRefining Department
Debit Credit
March 1 balance 31,800 Completed and transferred to Blending ?question mark
Materials 138,600
Direct labor 67,200
Overhead 482,000
March 31 balance ?question mark

The March 1 work in process inventory in the Refining Department includes materials, $7,900; direct labor, $3,800; and overhead, $20,100.

Costs incurred during March in the Blending Department were materials used, $45,000; direct labor, $17,200; and overhead cost applied to production, $116,000.

Required:

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.

  1. Raw materials used in production.
  2. Direct labor costs incurred.
  3. Manufacturing overhead costs incurred for the entire factory, $696,000. (Credit Accounts Payable.)
  4. Manufacturing overhead was applied to production using a predetermined overhead rate.
  5. Units completed in the Refining Department were transferred to the Blending Department, $682,000.
  6. Units completed in the Blending Department were transferred to Finished Goods, $770,000.
  7. Completed units were sold on account, $1,350,000. The Cost of Goods Sold was $600,000.

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 Departments Work in Process is given in the T-account shown above.)

Raw materials $ 209,600
Work in processBlending Department $ 44,000
Finished goods $ 19,000

THANK YOU! HAPPY THANKSGIVING!

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