Nature’s Way, Inc., keeps one of its production - 14109

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Problem 4-16 Cost Flows [LO1]

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
       to Bottling (760,000 ounces)

?       

  Materials

147,600  

  

 

  Direct labor

73,200  

  

 

  Overhead

481,000  

 

 



  March 31 balance

?       

   

 



 

 

 

       

 


 

     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. (Omit the "$" sign in your response.)

 

 

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.) (Record the transactions in the given order. Omit the "$" sign in your response.)

 

         

 

 

 

 

  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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