Question

Problem 16-1A Production cost flow and measurement; journal entries LO P1, P2, P3, P4 The following information applies to the questions displayed below) Sierra Company manufactures woven blankets and accounts for product costs using process costing. Data below are for one of its processing departments. The following information is available regarding its May inventories Raw materials inventory Work in process inventory Finished goods inventory Beginning Ending Inventory Inventory $62.000 $ 89,500 401,000 575,000 628,000 524,000 The following additional information describes the company's production activities for May. $ 200.000 1.506,00 70,500 $ 180.500 Raw materials purchases (on credit) Factory wages cost (paid in cash) other overhead cost (other Accounts credited) Materials used Direct Indirect Labor used Direct Indirect Overhead rate as a percent of direct labor Sales (on credit). $ 790,000 756,000 115 $4,500,000 The predetermined overhead rate was computed at the beginning of the year as 115% of direct labor cost.

Answer 1

Raw Materials					Work in process
RM - April 30	$             62,000	$       82,000	Indirect materials		WIP - April 30	$     4,01,000	$ 16,31,900	Cost of goods transferred
RM Purchases	$         2,90,000	$   1,80,500	DM used		DM used	$     1,80,500
					DL used	$     7,56,000
					Overhead applied	$     8,69,400
RM - May 31	$             89,500				WIP - May 30	$     5,75,000
Factory wages Payable					Finished Goods
Cash	$       15,46,000	$   7,90,000	Indirect labor		FG - April 30	$     6,28,000	$ 17,35,900	Cost of Goods Sold
		$   7,56,000	DL used		Cost of goods transferred	$   16,31,900
Balance	$                      -
Factory overhead					Finished goods - May 31	$     5,24,000
Indirect material	$             82,000	$   8,69,400	Overhead applied
Indirect labor	$         7,56,000				Income statement
Other overhead cost	$             70,500				Sales	$   45,00,000
					Less: Cost of goods sold	$ -17,35,900
Balance	$             39,100				Gross Profit	$   27,64,100
					Cost of goods transferred	$   16,31,900
					Cost of goods sold	$   17,35,900