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:
Work in Process—Blending
March 1 balance 32,800 Completed and transferred Materials 147,600 to Bottling (760,000 ounces) ?
Direct labor Overhead
March 31 balance
73,200 481,000
?
The $32,800 beginning inventory in the Blending Department consisted of the following ele- ments: 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.
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 Accounts Payable and use a single Manufacturing Overhead control account for the entire factory.)
d. Manufacturing overhead was applied to production using a predetermined overhead rate.
e. Units that were complete with respect to processing in the Blending Department were
transferred to the Bottling Department, $722,000.
f. Units that were complete with respect to processing in the Bottling Department were
transferred to Finished Goods, $920,000.
g. Completed units were sold on account for $1,400,000. The cost of goods sold was
$890,000.
2. 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 Blending Department’s Work in Process account is given above.)
After posting the entries to the T-accounts, find the ending balances in the inventory accounts and the manufacturing overhead account.
Woah lmao
To solve this problem, you need to record the costs incurred in both the Blending Department and Bottling Department during March. Here is the step-by-step solution:
1. Prepare journal entries for the costs incurred in both departments.
a. Raw materials were issued for use in production:
Blending Department:
Work in Process - Blending 147,600
Materials 147,600
b. Direct labor costs were incurred:
Blending Department:
Work in Process - Blending 73,200
Direct Labor 73,200
c. Manufacturing overhead costs for the entire factory were incurred:
Blending Department:
Work in Process - Blending 481,000
Overhead 481,000
d. Manufacturing overhead was applied to production using a predetermined overhead rate:
Blending Department:
Work in Process - Blending 760,000
Overhead Applied 760,000
e. Units that were complete with respect to processing in the Blending Department were transferred to the Bottling Department:
Blending Department:
Work in Process - Blending 722,000
Work in Process - Bottling 722,000
f. Units that were complete with respect to processing in the Bottling Department were transferred to Finished Goods:
Bottling Department:
Work in Process - Bottling 920,000
Finished Goods 920,000
g. Completed units were sold on account:
Finished Goods:
Finished Goods 1,400,000
Accounts Receivable 1,400,000
Cost of Goods Sold:
Cost of Goods Sold 890,000
Finished Goods 890,000
2. Post the journal entries to T-accounts. The account balances at the beginning of March are as follows:
Work in Process - Blending:
March 1 balance 32,800
Completed and transferred to Bottling 760,000
March 31 balance ?
Material:
March 1 balance 8,000
Issued for production 147,600
March 31 balance ?
Direct Labor:
March 1 balance 4,000
Incurred in the Blending Department 73,200
March 31 balance ?
Overhead:
March 1 balance 20,800
Incurred in the Blending Department 481,000
March 31 balance ?
Work in Process - Bottling:
March 1 balance ?
Transferred from Blending Department 722,000
March 31 balance ?
Finished Goods:
March 1 balance ?
Transferred from Bottling Department 920,000
Sold on account 1,400,000
March 31 balance ?
Cost of Goods Sold:
March 1 balance ?
Sold 890,000
March 31 balance ?
After posting the entries to the T-accounts, find the ending balances in the inventory accounts and the manufacturing overhead account by adding up the debits and credits for each account.