Problem 4-16 Cost Flows [LO1] Nature’s Way, Inc., keeps one of its production fa

Question

Problem 4-16 Cost Flows [LO1]

Nature’s Way, Inc., keeps one of its production facilities busy making a perfume called Essence de la Vache. The perfume goes through two processing departments: Blending and Bottling.

      The following incomplete Work in Process account is provided for the Blending Department for March:

     The $33,500 beginning inventory in the Blending Department consisted of the following elements: materials, $8,100; direct labor, $3,600; and overhead applied, $21,800.

     Costs incurred during March in the Bottling Department were: materials used, $45,000; direct labor, $16,800; and overhead cost applied to production, $106,000.

Prepare journal entries to record the costs incurred in both the Blending Department and Bottling Department during March. (Omit the "$" sign in your response.)

Manufacturing overhead costs for the entire factory were incurred, $626,000. (Credit Accounts Payable and use a single Manufacturing Overhead control account for the entire factory.)

Units that were complete with respect to processing in the Blending Department were transferred to the Bottling Department, $642,000.

Units that were complete with respect to processing in the Bottling Department were transferred to Finished Goods, $710,000.

Nature’s Way, Inc., keeps one of its production facilities busy making a perfume called Essence de la Vache. The perfume goes through two processing departments: Blending and Bottling.

      The following incomplete Work in Process account is provided for the Blending Department for March:

Explanation / Answer

Debit Credit a) Work in process (Bottling) $     45,000 Work in process (Blending) $   138,600            Raw materials $   183,600 Raw materials used for production b) Work in process (Bottling) $     16,800 Work in process (Blending) $     63,200            Salaries payable $     80,000 Direct labor cost incurred on production c) Manufacturing overheads $   626,000            Accounts payable $   626,000 Incurred Manufacturing overhead costs for the entire factory for $626,000 d) Work in process (Bottling) $   106,000 Work in process (Blending) $   477,000            Manufacturing Overheads $   583,000 Manufacturing overhead applied to production e) Work in process - Bottling $   642,000            Work in process - (Blending) $   642,000 Units transferred to Bottling f) Finshed goods $   710,000            Work in process - Bottling $   710,000 Units transferred to finished goods g) Accounts receivable $1,450,000            Sales $1,450,000 Goods sold on account Cost of goods sold $   600,000            Finished Goods $   600,000 Cost of goods sold worth $600,000

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