Nature’s Way, Inc., keeps one of its production facilities busy making a perfume called Essence de la Vache
The $32,800 beginning inventory in the Blending Department consisted of the following elements: materials, $8,000; direct labor, $4,000; and overhead applied, $20,800.
Costs incurred during March in the Bottling Department were: materials used, $45,000; direct labor, $17,000; and overhead cost applied to production, $108,000.
Mid-Term Exam I-Nature's Way, Inc., keeps one of its production facilities busy making a perfume 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 March: Work in Process-Blending Completed and transferred to Bottling (760,000 ounces) ? March 1 balance 32,800 Materials 147,600 73,200 Direct labor 481,000 Overhead ? March 31 balance The $32,800 beginning inventory in the Blending Department consisted of the following elements: materials, $8,000; direct labor, $4,000; and overhead applied, $20,800. incurred during March in the Bottling Department were: materials used, $45,000; direct labor, $17,000; and overhead cost applied to production, $108,000. Required: 1. Prepare journal entries to record the costs incurred in both the Blending Department and Bottling Department during March. Key your entries to items (a) through (g) below: 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, $596,000. (Credit Payable and use a single Manufacturing Overhead control account for the entire actory.) d. Manufacturing overhead was applied to production using a predetermined overhead ate. e. Units that were complete with respect to processing in the Blending Department were ansferred to the Bottling Department, $722,000. f Units that were complete with respect to processing in the Bottling were nsferred to Finished Goods, $920,000. e Completed units were sold on account for $1,400,000. The cost of goods sold was 90,000 Post the iournal entries from (1) above to T-accounts. The following ac
To calculate the ending inventory in the Blending Department, we need to consider the costs incurred during March in the Bottling Department and adjust for any changes in inventory.
First, let's calculate the costs incurred in the Blending Department during March:
Beginning inventory:
- Materials: $8,000
- Direct labor: $4,000
- Overhead applied: $20,800
Costs incurred in the Bottling Department during March:
- Materials used: $45,000
- Direct labor: $17,000
- Overhead cost applied: $108,000
To find the ending inventory in the Blending Department, we need to determine how much of the beginning inventory was used in the Bottling Department and adjust for any changes:
1. Calculate the total costs in the Blending Department:
Beginning inventory costs + Costs incurred in the Bottling Department
= $8,000 + $4,000 + $20,800 + $45,000 + $17,000 + $108,000
= $202,800
2. Determine the cost of goods completed and transferred out of the Blending Department:
Total costs in the Blending Department at the beginning + Costs incurred in the Bottling Department
= $32,800 + $202,800
= $235,600
3. Calculate the ending inventory in the Blending Department:
Total costs in the Blending Department - Cost of goods completed and transferred out
= $202,800 - $235,600
= -$32,800
The negative ending inventory indicates that all the beginning inventory was used during the month of March, and no inventory was left at the end of the month in the Blending Department.