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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: Work in Process-Refining Department March 1 balance 33,400 Completed and transferred to Blending Materials 137,600 74,200 480,000 Direct labor Overhead March 31 balance The March 1 work in process inventory in the Refining Department consists of the following elements: materials, $8,900; direct labor, $4,700; and overhead, $19,800. Costs incurred during March in the Blending Department were: materials used, $45,000; direct labor, $17,200; and overhead cost applied to production, $103,000. 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, $662,000. 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, $1,360,000. The Cost of Goods Sold was $610,000. 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.) 205,600 $ 50,000 23,000 Raw materials Work in process-Blending Department Finished goods Transactions Credit No General Journal Debit 1 Work in process-Refining Department 137,600 a. Work in process-Blending Department 45,000 Raw materials 182,600 2 Work in process-Refining Department 74,200 17,200 Work in process-Blending Department Salaries and wages payable 91,400 3 Manufacturing overhead 686,000 C. 686,000 Accounts payable 4 662,000 d. Work in process-Blending Department Work in process-Refining Department 662,000 5 Work in process-Blending Department 662,000 662,000 Work in process-Refining Department Finished goods 6 f. 750,000 Work in process-Blending Department 750,000 g(1) Accounts receivable 1,360,000 7 Sales 1,360,000 g(2) 8 Cost of goods sold 610,000 Finished goods 610,000 Accounts Receivable Raw Materials Beg. Bal. Beg. Bal. 205,600 1,360,000 182,600 g. a End. Bal. 1,360,000 23,000 End. Bal. Work in Process-Blending Department Work in Process-Refining Department Beg. Bal. Beg. Bal. 50,000 662,000 e. 750,000 f. 137,600 45,000 a. a b 74,200 17,200 d. 480,000 d. 103,000 662,000 End. Bal End. Bal 29,800 127,200 Finished Goods Manufacturing Overhead Beg. Bal. Beg. Bal 23,000 686,000 f. 750,000 610,000 d C. 163,000 686,000 End. Bal End. Bal. Accounts Payable Salaries and Wages Payable Beg. Bal. Beg. Bal. 686,000 b. 91,400 C End. Bal. 686,000 End. Bal. 91,400 Sales Cost of Goods Sold Beg. Bal. Beg. Bal. 610,000X 1,360,000 1,360,000 610,000 End. Bal. End. Bal. X
