Reference no: EM132506932

Sierra Company manufactures soccer balls in two sequential processes: Cutting and Stitching. All direct materials enter production at the beginning of the cutting process. The following information is available regarding its May inventories.

Beginning Inventory : Raw materials : $6,000

: WIP inventory - Cutting : 43,500

: WIP inventory - Stitching : 63,300

: Finished goods inventory : 20,100

Ending Inventory : Raw materials : $9,250

: WIP Inventory - Cutting : 51,500

: WIP Inventory - Stitching : 63,300

: Finished goods inventory : 8,250

The additional information describes the company's production activities for May.

Direct Materials

Raw materials purchased on credit : $25,000

Direct materials used - Cutting : 21,750

Direct materials used - Stitching : 0

Direct Labor

Direct labor - Cutting : $15,600

Direct labor - Stitching : 62,400

Total factory payroll paid (in cash) : 133,000

Factory Overhead (actual costs)

Indirect materials used : $6,000

Indirect labor used : 55,000

Other overhead costs : 47,000

Factory Overhead Rates

Cutting : 150% of direct materials used

Stitching : 120% of direct labor used

Sales : $256,000

Question 1: Compute the amount of production costs transferred from Cutting to Stitching, production costs transferred from Stitching to finished goods, and cost of goods sold.

Question 2: Prepare summary journal entries dated May 31 to record the following May activities: raw materials purchases, direct materials usage, indirect materials usage, direct labor costs incurred, indirect labor costs incurred, payment of factory payroll, other overhead costs (credit Other Accounts), overhead applied, goods transferred from Cutting to Stitching, goods transferred from Stitching to finished goods, cost of goods sold, and sales.