Problem 4-16 Cost Flows [LO1]
Natureâs Way, Inc., keeps one of its production facilities busymaking a perfume called Essence de la Vache. The perfume goesthrough two processing departments: Blending and Bottling.
The following incompleteWork in Process account is provided for the Blending Department forMarch:
Work in ProcessâBlending
March 1 balance 33,500 Completed and transferred
to Bottling (760,000ounces) ? Materials 138,600 Direct labor 63,200 Overhead 477,000 March 31 balance ?
The $33,500 beginning inventory inthe Blending Department consisted of the following elements:materials, $8,100; direct labor, $3,600; and overhead applied,$21,800.
Costs incurred during March in theBottling Department were: materials used, $45,000; direct labor,$16,800; and overhead cost applied to production, $106,000.
Required:
1. Prepare journal entries to record the costs incurred in both theBlending Department and Bottling Department during March.(Omit the "$" sign in your response.)
a. Raw materialswere issued for use in production. b. Direct laborcosts were incurred. c. Manufacturing overhead costs for the entire factory wereincurred, $626,000. (Credit Accounts Payable and use a singleManufacturing Overhead control account for the entire factory.)
d. Manufacturingoverhead was applied to production using a predetermined overheadrate. e. Units that were complete with respect to processing in theBlending Department were transferred to the Bottling Department,$642,000.
f. Units that were complete with respect to processing in theBottling Department were transferred to Finished Goods,$710,000.
g. Completed unitswere sold on account for $1,450,000. The cost of goods sold was$600,000.
Problem 4-16 Cost Flows [LO1]
Natureâs Way, Inc., keeps one of its production facilities busymaking a perfume called Essence de la Vache. The perfume goesthrough two processing departments: Blending and Bottling. |
The following incompleteWork in Process account is provided for the Blending Department forMarch: |
| Work in ProcessâBlending |
| March 1 balance | 33,500 | Completed and transferred to Bottling (760,000ounces) | ? | |
| Materials | 138,600 | |||
| Direct labor | 63,200 | |||
| Overhead | 477,000 | |||
| March 31 balance | ? | |||
The $33,500 beginning inventory inthe Blending Department consisted of the following elements:materials, $8,100; direct labor, $3,600; and overhead applied,$21,800. |
Costs incurred during March in theBottling Department were: materials used, $45,000; direct labor,$16,800; and overhead cost applied to production, $106,000. |
| Required: |
| 1. | Prepare journal entries to record the costs incurred in both theBlending Department and Bottling Department during March.(Omit the "$" sign in your response.) |
| a. | Raw materialswere issued for use in production. |
| b. | Direct laborcosts were incurred. |
| c. | Manufacturing overhead costs for the entire factory wereincurred, $626,000. (Credit Accounts Payable and use a singleManufacturing Overhead control account for the entire factory.) |
| d. | Manufacturingoverhead was applied to production using a predetermined overheadrate. |
| e. | Units that were complete with respect to processing in theBlending Department were transferred to the Bottling Department,$642,000. |
| f. | Units that were complete with respect to processing in theBottling Department were transferred to Finished Goods,$710,000. |
| g. | Completed unitswere sold on account for $1,450,000. The cost of goods sold was$600,000. |
Related questions
Hello, someone posted the answers (below) to my question. ButI'd like someone to explain how they arrived at each of the numbersin the journal entries so I can learn how to figure it out on myown later. Thanks in advance for your help.
Problem 4-16 Cost Flows [LO1]
Natureâs Way, Inc., keeps one of its production facilities busymaking a perfume called Essence de la Vache. The perfume goesthrough two processing departments: Blending and Bottling. |
The following incompleteWork in Process account is provided for the Blending Department forMarch: |
| Work in ProcessâBlending |
| March 1 balance | 33,500 | Completed and transferred to Bottling (760,000ounces) | ? | |
| Materials | 138,600 | |||
| Direct labor | 63,200 | |||
| Overhead | 477,000 | |||
| March 31 balance | ? | |||
The $33,500 beginning inventory inthe Blending Department consisted of the following elements:materials, $8,100; direct labor, $3,600; and overhead applied,$21,800. |
Costs incurred during March in theBottling Department were: materials used, $45,000; direct labor,$16,800; and overhead cost applied to production, $106,000. |
| Required: |
| 1. | Prepare journal entries to record the costs incurred in both theBlending Department and Bottling Department during March.(Omit the "$" sign in your response.) |
| a. | Raw materialswere issued for use in production. |
| b. | Direct laborcosts were incurred. |
| c. | Manufacturing overhead costs for the entire factory wereincurred, $626,000. (Credit Accounts Payable and use a singleManufacturing Overhead control account for the entire factory.) |
| d. | Manufacturingoverhead was applied to production using a predetermined overheadrate. |
| e. | Units that were complete with respect to processing in theBlending Department were transferred to the Bottling Department,$642,000. |
| f. | Units that were complete with respect to processing in theBottling Department were transferred to Finished Goods,$710,000. |
| g. | Completed unitswere sold on account for $1,450,000. The cost of goods sold was$600,000. |
Expert 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 forthe 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 |
Lubricants, Inc., produces a special kind of grease that iswidely used by race car drivers. The grease is produced in twoprocessing departments: |
The following incompleteWork in Process account is available for the Refining Departmentfor March: |
| Work in ProcessâRefining Department |
| March 1 balance | 33,500 | Completed andtransferred to Blending | ? | |
| Materials | 146,600 | |||
| Direct labor | 65,200 | |||
| Overhead | 480,000 | |||
| March 31balance | ? | |||
The March 1 work in processinventory in the Refining Department consists of the followingelements: materials, $7,600; direct labor, $4,500; and overhead,$21,400. |
Costs incurred during March in theBlending Department were: materials used, $46,000; direct labor,$17,900; and overhead cost applied to production, $107,000. |
| Required: |
| 1. | Prepare journal entries to record the costs incurred in both theRefining Department and Blending Department during March.(If no entry is required for a transaction/event, select"No journal entry required" in the first accountfield.) |
| a. | Raw materials were issued foruse in production. |
| b. | Direct labor costs wereincurred. |
| c. | Manufacturing overhead costs for the entire factory wereincurred, $706,000. (Credit Accounts Payable.) |
| d. | Manufacturing overhead cost wasapplied to production using a predetermined overhead rate. |
| e. | Units that were complete with respect to processing in theRefining Department were transferred to the Blending Department,$642,000. |
| f. | Units that were complete with respect to processing in theBlending Department were transferred to Finished Goods,$740,000. |
| g. | Completed units were sold onaccount, $1,430,000. The Cost of Goods Sold was $620,000. |
| 2. | Post the journal entries from (1) above to T-accounts. Thefollowing account balances existed at the beginning of March. (Thebeginning balance in the Refining Departmentâs Work in Processaccount is given on the prior page.) |
| Raw materials | $ | 208,600 |
| Work inprocessâBlending Department | $ | 51,000 |
| Finished goods | $ | 27,000 |
| After posting the entries to the T-accounts, find the endingbalance in the inventory accounts and the manufacturing overheadaccount. PLEASE BE CLEAR ON ALL T ACCOUNTS AND ALL THE JOURNALENTRIES |
Lubricants, Inc., produces a special kind of grease that iswidely used by race car drivers. The grease is produced in twoprocessing departments: Refining and Blending. Raw materials areintroduced at various points in the Refining Department. |
The following incompleteWork in Process account is available for the Refining Departmentfor March: |
| Work in ProcessâRefining Department |
| March 1 balance | 34,300 | Completed andtransferred to Blending | ? | |
| Materials | 156,600 | |||
| Direct labor | 65,200 | |||
| Overhead | 487,000 | |||
| March 31balance | ? | |||
The March 1 work in processinventory in the Refining Department consists of the followingelements: materials, $8,900; direct labor, $3,900; and overhead,$21,500. |
Costs incurred during March in theBlending Department were: materials used, $46,000; direct labor,$17,800; and overhead cost applied to production, $116,000. |
| Required: |
| 1. | Prepare journal entries to record the costs incurred in both theRefining Department and Blending Department during March.(If no entry is required for a transaction/event, select"No journal entry required" in the first accountfield.) |
| a. | Raw materials were issued foruse in production. | ||||||||||||||||
| b. | Direct labor costs wereincurred. | ||||||||||||||||
| c. | Manufacturing overhead costs for the entire factory wereincurred, $686,000. (Credit Accounts Payable.) | ||||||||||||||||
| d. | Manufacturing overhead cost wasapplied to production using a predetermined overhead rate. | ||||||||||||||||
| e. | Units that were complete with respect to processing in theRefining Department were transferred to the Blending Department,$662,000. | ||||||||||||||||
| f. | Units that were complete with respect to processing in theBlending Department were transferred to Finished Goods,$800,000. | ||||||||||||||||
| g. | Completed units were sold on account, $1,380,000. The Cost ofGoods Sold was $610,000.
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