Problem 4-17 Cost Flows [LO 4-1] Lubricants, Inc., produces a special kind of gr
ID: 2498105 • Letter: P
Question
Problem 4-17 Cost Flows [LO 4-1]
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:
The March 1 work in process inventory in the Refining Department consists of the following elements: materials, $7,200; direct labor, $3,700; and overhead, $20,800.
Costs incurred during March in the Blending Department were: materials used, $46,000; direct labor, $16,700; and overhead cost applied to production, $109,000.
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.)
Manufacturing overhead costs for the entire factory were incurred, $696,000. (Credit Accounts Payable.)
Units that were complete with respect to processing in the Refining Department were transferred to the Blending Department, $662,000.
Units that were complete with respect to processing in the Blending Department were transferred to Finished Goods, $720,000.
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 account is given in the above question data.)
After posting the entries to the T-accounts, find the ending balance in the inventory accounts and the manufacturing overhead account.
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:
Explanation / Answer
Date
Accounts Title and Explanations
Debit
Credit
a
Work in Process-Refining Department
Work in Process-Blending Department
Raw Material control account
(issue of materials for production)
147,600
46,000
193,600
b
Work in Process-Refining Department
Work in Process-Blending Department
Cash
(direct labor costs incurred)
82,200
16,700
98,900
c
Manufacturing Overhead Control Account
Accounts payable
(incurring of manufacturing overhead expenses)
696,600
696,600
d
Work in Process-Refining Department
Work in Process-Blending Department
Manufacturing Overhead Control Account
(OH applied at pre-determined rates)
476,000
109,000
585,000
e
Work in Process-Blending Department
Work in Process-Refining Department
(being the cost of units completed and transferred)
662,000
662,000
f
Finished Goods
Work in Process-Blending Department
(being the cost of finished goods transferred)
720,000
720,000
g
Cost of Goods sold
Finished Goods
(being the cost of goods sold)
640,000
640,000
Work in Process-Refining Department
March 1 Balance 31,700
Raw Material 147,600
Labor 82,200
OH applied 476,000
737,500
Completed and transferred to Blending 662,000
March 31 Balance 75,500
_______
737,500
Work in Process-Blending Department
March 1 Balance 43,000
Transfer from refining dep 662,000
Raw Material 46,000
Labor 16,700
OH applied 109,000
876,700
Completed & transferred to Finished 720,000
Goods
March 31 Balance 156,700
_______
876,700
Finished Goods A/c
March 1 Balance 23,000
Transfer from blending 720,000
_______
743,000
Cost of goods sold 640,000
March 31 Balance 103,000
_______
743,000
Raw Materials A/c
March 1 Balance 208,600
Purchases figures not available
________
Issued for production 193,600
March 31 Balance cannot be found
_______
Production Overhead Control A/c
March Accounts Payable 696,000
Transfer to Work in process 585,000
Balance(under applied overhead 111,000
Balances on 31st March:
Inventory : cannot be found out as purchase figure is not available
WIP-Refining : $ 75,500
WIP-Blending : $156,700
Finished Goods : $103,000
Manufacturing Overhead (debit) : $111,000
Date
Accounts Title and Explanations
Debit
Credit
a
Work in Process-Refining Department
Work in Process-Blending Department
Raw Material control account
(issue of materials for production)
147,600
46,000
193,600
b
Work in Process-Refining Department
Work in Process-Blending Department
Cash
(direct labor costs incurred)
82,200
16,700
98,900
c
Manufacturing Overhead Control Account
Accounts payable
(incurring of manufacturing overhead expenses)
696,600
696,600
d
Work in Process-Refining Department
Work in Process-Blending Department
Manufacturing Overhead Control Account
(OH applied at pre-determined rates)
476,000
109,000
585,000
e
Work in Process-Blending Department
Work in Process-Refining Department
(being the cost of units completed and transferred)
662,000
662,000
f
Finished Goods
Work in Process-Blending Department
(being the cost of finished goods transferred)
720,000
720,000
g
Cost of Goods sold
Finished Goods
(being the cost of goods sold)
640,000
640,000
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