Question

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 33,600     Completed and transferred        to Blending ?          Materials 141,600        Direct labor 71,200        Overhead 485,000     March 31 balance ?        Required: 1. Prepare journal entries to record the costs incurred in both the Refining Department and Blending Department during March. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) a. Raw materials were issued for use in production. b. Direct labor costs were incurred. c. Manufacturing overhead costs for the entire factory were incurred, $636,000. (Credit Accounts Payable.) d. Manufacturing overhead cost 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, $672,000. 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, $1,380,000. The Cost of Goods Sold was $660,000. The March 1 work in process inventory in the Refining Department consists of the following elements: materials, $8,000; direct labor, $3,800; and overhead, $21,800.      Costs incurred during March in the Blending Department were: materials used, $45,000; direct labor, $17,100; and overhead cost applied to production, $110,000.

Answer 1

Transactions	General Journal	Debit	Credit
a.	Work in process-Refining department	141600
	Work in process-Blending department	45000
	Raw Materials		186600
	(To record direct materials used in production)
b.	Work in process-Refining department	71200
	Work in process-Blending department	17100
	Salaries and Wages payable		88300
	(To record direct labor costs incurred)
c.	Manufacturing overhead	636000
	Accounts Payable		636000
	(To record manufacturing overhead incurred)
d.	Work in process-Refining department	485000
	Work in process-Blending department	110000
	Manufacturing overhead		595000
	(To record manufacturing overhead applied)
e.	Work in process-Blending department	672000
	Work in process-Refining department		672000
	(To record transfers from Refining to Blending department)
f.	Finished goods	750000
	Work in process-Blending department		750000
	(To record goods completed and transferred to finished goods)
g.(1)	Accounts receivable	1380000
	Sales		1380000
	(To record sales on account)
g.(2)	Cost of goods sold	660000
	Finished goods		660000
	(To record cost of sales)