Reference no: EM13965219

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 anduse 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.