Hilox, Inc. produces an antacid product that goes through two departments?Cooking and Bottling. The company has recently hired a new assistant accountant, who has prepared the following summary of production and costs for the Cooking Department for March using the weighted average cost method:

The new assistant accountant has determined the cost per litre transferred to be $2.415, as follows:

However, the assistant accountant is unsure how to use this unit-cost figure in assigning cost to the ending work-in-process inventory. In addition, the company?s general ledger shows only $900,000 in cost transferred from the Cooking Department to the Bottling Department, which does not agree with the $966,000 figure above. The general ledger also shows the following costs incurred in the Bottling Department during March: materials used, $130,000; direct labour cost incurred, $80,000; and overhead cost applied to products, $158,000.

Required:Litres completed and transferred to the bottling department: 400,000 litres at ? per litre Work-in-process inventory, May 31: 50,000 litres, 70% complete as to materials and 40% complete as to labour and overhead

1. Prepare journal entries as follows to record activity in the company during March. Key your entries to the letters (a) through (g):

a. Raw materials were issued to the two departments for use in production.

b. Direct labour costs were incurred in the two departments.

c. Manufacturing overhead costs were incurred, $400,000. (Credit accounts payable.) The company maintains a single manufacturing overhead account for the entire plant.

d. Manufacturing overhead cost was applied to production in each department using predetermined overhead rates.

e. Units completed as to processing in the Cooking Department were transferred to the bottling department, $900,000.

f. Units completed as to processing in the Bottling Department were transferred to finished goods, $1,300,000.

g. Units were sold on account, $2,000,000. The cost of goods sold was $1,250,000.

2. Post the journal entries from Requirement (1) to T-accounts. Balances in selected accounts on March 1 are as follows:

Raw Materials................................................................$710,000Work in Process?Bottling Department.........................85,000Finished Goods..................................................................45,000

After posting the entries to the T-accounts, find the ending balance in the inventory accounts and the manufacturing overhead account.

3. Prepare a production report for the Cooking Department for March using the weighted average cost method.

4. Prepare a production report for the Cooking Department for March using the FIFO method.

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Cooking Department costs: Work-in-process inventory, March 1: 70,000 litres, $ 61,000* 60% complete as to materials and 30% complete as to labour and overhead Materials added during March 570,000 100,000 Labour added during March Overhead applied during March 235,000 Total departmental costs $966,000 Cooking Department costs assigned to: Litres completed and transferred to the bottling department: 400,000 litres at ? per litre Work-in-process inventory, May 31: 50,000 litres, 70% complete as to materials and 40% complete as to labour and overhead Total departmental costs assigned *Consists of materials, $39,000; labour, $5,000; and overhead, $17,000. Total departmental costs, $966,000 Litres completed and transferred, 400,000 = $2.415 per litre