Question

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:

.:.
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.

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 factories 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.)
Raw Materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $198,600
Work in Process—Bottling Department . . . . . . . . . . $49,000
Finished Goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . $20,000
After posting the entries to the T-accounts, find the ending balances in the inventory accounts and the manufacturing overhead account.



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  • CreatedSeptember 27, 2013
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