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
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 |