Question
The March 1 work in process inventory in the Refining Department consists of the following elements: materials, $8,500; direct labor, $4,200; and overhead, $21,000. Costs
The March 1 work in process inventory in the Refining Department consists of the following elements: materials, $8,500; direct labor, $4,200; and overhead, $21,000.
Costs incurred during March in the Blending Department were: materials used, $44,000; direct labor, $17,200; and overhead cost applied to production, $107,000.
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.
- Raw materials used in production.
- Direct labor costs incurred.
- Manufacturing overhead costs incurred for the entire factory, $656,000. (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, $642,000.
- Units that were complete with respect to processing in the Blending Department were transferred to Finished Goods, $760,000.
- Completed units were sold on account, $1,360,000. The Cost of Goods Sold was $630,000.
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.)
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