Reference no: EM131211092
Sierra Company manufactures woven blankets and accounts for product costs using process costing. The company uses a single processing department. The following information is available regarding its May inventories Beginning Inventory Ending Inventory Raw materials inventory $ 53,000 $ 79,000 Work in process inventory 413,000 581,000 Finished goods inventory 612,000 325,001 The following additional information describes the company's production activities for May. Raw materials purchases (on credit) $ 290,000 Factory payroll cost (paid in cash) 1,573,000 Other overhead cost (Other Accounts credited) 55,500 Materials used Direct $ 194,000 Indirect 70,000 Labor used Direct $ 790,000 Indirect 783,000 Overhead rate as a percent of direct labor 115 % Sales (on credit) $ 5,500,000
The predetermined overhead rate was computed at the beginning of the year as 115% of direct labor cost.
1. Compute the cost of products transferred from production to finished goods and cost of goods sold. For each category (raw materials, work in progress, factory payroll payable, finished goods, factory overhead, income statement)
2. Prepare summary journal entries dated May 31 to record the following production activities during May: (a) raw materials purchases, (b) direct materials usage, (c) indirect materials usage, (d) direct labor costs incurred, (e) indirect labor costs incurred, (f) payment of factory payroll, (g) other overhead costs, (h) overhead applied, (i) goods transferred from production to finished goods, and (j) sale of finished goods.
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