Reference no: EM131265251

Assignment

Fryer's Choice produces a specially blended vegetable oil widely used in restaurant deep fryers. The blending process creates a cooking oil that can be heated to a high temperature, but does not smoke or smell. The oil is produced in two departments: Blending and Bottling. Raw materials are introduced at various points in the Blending Department.

The following incomplete Work in Process T-account is available for the Blending Department for March:

Work in Process-Blending
March 1 balance (20,000 litres; materials 100% complete; labour and overhead 90% complete)	$38,000	Completed and transferred to Bottling (   ?    litres)	$???
March costs added:
Oils (390,000 litres)	495,000
Direct labour	72,000
Overhead	181,000
March 31 inventory (40,000 litres; materials 75% complete, labour and overhead 25% complete)	$???

The March 1 beginning inventory in the Blending Department consists of the following cost elements: raw materials, $25,000; direct labour, $4,000; and overhead, $9,000.

Costs incurred during March in the Bottling Department were materials used, $115,000; direct labour, $18,000; and overhead cost applied to production, $42,000. The company uses the weighted-average method in its process costing.

Required:

1. Prepare journal entries to record the cost incurred in both the Blending Department and the Bottling Department during March. Key your entries to the items (a) through (f) below:

a. Raw materials were issued for use in production
b. Direct labour costs were incurred.
c. Manufacturing overhead costs for the entire factory were incurred: $225,000. (Hint: Credit Accounts Payable.)
d. Manufacturing overhead cost was applied to production using a predetermined overhead rate.
e. Units that were complete with respect to processing in the Bottling Department were transferred to finished goods: $950,000.
f. Completed units were sold on account: $1,500,000. The cost of goods sold was $890,000.

2. Post the journal entries from requirement 1 above to T-accounts. The following account balances existed at the beginning of March. (Note: The beginning balance in the Blending Department's Work in Process account is given above.)

Raw materials $ 681,000
Work in Process-Bottling Department $ 65,000
Finished Goods $ 20,000

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

Work in Process - Bottling Department Work in Process- Blending Depart.

Beg. Balance Beg. Balance

Ending Balance Ending Balance

Manufacturing Overhead Finished Goods
Beg. Balance Beg. Balance

Ending Balance Ending Balance

Raw Materials Accounts Payable
Beg. Beg. Balance
balance

Ending Ending Balance
Balance

Salaries and Wages Payable Sales
Beg. Balance Beg. Balance

Ending. Balance Ending Balance

Accounts Receivable Cost of Goods Sold
Beg.Bala Beg. Balance

Ending. Balance Ending. Balance

3. Prepare a production report for the Blending Department for March. (Round "Cost per equivalent unit" answers to 2 decimal places.)

		Equivalent Units
	Material	Labour	Overhead
Units accounted as follows
Transferred to Bottling:
Work in Process March 31
Total Units and equivalent units of production
Costs per equivalent units

Total Units and equivalent units of production
Costs per equivalent units

	Total Costs	Material	Labour	Overhead
Cost to be accounted for:
Work in process March 1
Cost added by bleding department
Total costs
Equivalent units of production
Cost per equivalent units

4.- Prepare the journal entry to record the transfer of finished goods from the Blending Department to the Bottling Department and post to the appropriate T-accounts prepared in requirement 2 above.

Record the entry to transfer of finished goods from the Blending Department to the Bottling Department.