In: Accounting
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 | 32,000 | Completed and transferred to Blending |
? |
Materials | 146,600 | ||
Direct labor | 67,200 | ||
Overhead | 480,000 | ||
March 31 balance | ? |
The March 1 work in process inventory in the Refining Department consists of the following elements: materials, $8,600; direct labor, $3,200; and overhead, $20,200.
Costs incurred during March in the Blending Department were: materials used, $45,000; direct labor, $16,300; and overhead cost applied to production, $107,000.
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.
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.)
Raw materials | $ | 209,600 |
Work in process—Blending Department | $ | 47,000 |
Finished goods | $ | 24,000 |