Question

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: Raw materials inventory Work in process inventory-Cutting Work in process inventory-stitching Finished goods inventory Beginning Inventory $ 51, 000 133, 500 153, 300 38,100 Ending Inventory $ 61,000 105,500 88, 400 26,250 The following additional information describes the company's production activities for May. Direct materials Raw materials purchased on credit Direct materials used-cutting Direct materials used-Stitching $70,000 24,000 Direct labor Direct labor-Cutting Direct labor-Stitching Total factory payroll paid (in cash) $ 20,100 80, 400 157,300 Factory Overhead (Actual costs) Indirect materials used Indirect labor used Other overhead costs $ 36,000 56,800 56,000 Factory Overhead Rates Cutting (150% of direct materials used) Stitching (120% of direct labor used) $616,000 Sales

Answer 1

a) Production Cost transferred from Cutting to stitching= 72,100 $

b) Production Cost transferred from Stitching to Finished = 217,400 $

c) Cost of Goods sold = 229,250 $

Please go through the following attachments for solution.

Raw Materials (RM) Amount Credit 51,000 Work in process (WIP) - Cutting 70,000 Factory Overhead Debit Balance b/d Accounts Payable Debit Amount 24,000 36,000 Work in process (WIP) - Cutting Amount Credit Balance b/d 133,500 Work in process (WIP) - Stitching Raw Materials (RM) 24,000 Factory Wages Payable 20,100 Amount 72,100 Balance c/d 121,000 Total 61,000 121,000 Balance c/d 177,600 Total 105,500 177,600 Total Total Work in process (WIP) - Stitching Debit Amount Credit Balance b/d 153,300 Finished Goods (FG) Factory Wages Payable 80,400 Work in process (WIP) - Cutting 72,100 Amount 217,400 Debit cash Factory Wages Payable Amount Credit 157,300 Work in process (WIP) - Cutting Work in process (WIP) - Stitching Factory Overhead Amount 20,100 80,400 56,800 Balance c/d 305,800 Total 88,400 305,800 Total Total 157,300 Total 157,300 Debit Raw Materials (RM) Factory Wages Payable Other Accounts Factory Overhead Amount Credit Amount 36,000 Work in process (WIP) - Cutting 36,000 56,800 Work in process (WIP) - Stitching 96,480 56,000 Finished Goods (FG) Debit Amount Credit Balance b/d 38,100 Cost of Goods sold Work in process (WIP) - Stitching 217,400 Amount 229,250 Under absorbed overheads 148,800 Total 16,320 148,800 Balance c/d 255,500 Total 26,250 255,500 Total Total Income statement Partial) Sales Cost of Goods sold Gross Profit 616,000 229,250 386,750 Cost of Goods transferred to finished Goods Cost of Goods sold 217,400 229,250

Credit Number Date General Journal 1 May-31 Raw Materials (RM) Accounts Payable Debit 70,000 70,000 2 24,000 May-31 Work in process (WIP) - Cutting Work in process (WIP) - Stitching Raw Materials (RM) 24,000 3 36,000 May-31 Factory Overhead Raw Materials (RM) 36,000 4 May-31 Work in process (WIP) - Cutting Work in process (WIP) - Stitching Factory Wages Payable 20,100 80,400 100,500 5 56,800 May-31 Factory Overhead Factory Wages Payable 56,800 6 157,300 May-31 Factory Wages Payable Cash 157,300 7 56,000 May-31 Factory Overhead Other Accounts 56,000 8 May-31 Work in process (WIP) - Cutting Work in process (WIP) - Stitching Factory Overhead 36,000 96,480 132,480 9 72,100 May-31 Work in process (WIP) - Stitching Work in process (WIP) - Cutting 72,100 10 217,400 May-31 Finished Goods Work in process (WIP) - Stitching 217,400 11 229,250 May-31 Cost of Goods sold Finished Goods 229,250 12 616,000 May-31 Cash Sales 616,000 Note: There may be different account titles in your work sheet. If there is any further doubts, Please text it in comment box.