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: Work in process inventory-Cutting Work in process inventory-Stitching Finished goods inventory Beginning Ending Inventory Inventory 223,500 150,500 243, 300 116,300 56,100 44,250 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 $115,000 26,250 0 Direct labor Direct labor-Cutting Direct labor-Stitching Total factory payroll paid (in cash) $ 24,600 98,400 181,600 Factory Overhead (Actual costs) Indirect materials used Indirect labor used Other overhead costs $68,400 58,600 65,000 Factory Overhead Rates Cutting (150% of direct materials used) Stitching (120% of direct labor used) Sales $976,000 Required: 1. Compute the amount of (a) production costs transferred from Cutting to Stitching, (b) production costs transferred from Stitching to finished goods, and (c) cost of goods sold.

Answer 1

UFE INSURANCE CORPORATION OF INDIA col 1,15,000 OR FBeing Journal Entries Date Particulare Dr. ($) May Do 1,15,000 :31 Inventory Alc To Acounts Payable de Being raw materiale To Sundry, Greditors purchased on credit) May 31 Work-InProgarees 26 250 Dy 26,250 To direct material wed to production) May 31 Factory oueshead alc, D 68.400 68,400 Being indirety material wed to production) May 31 wage contain Bank Alch Control Alc Or 1,23,000 123000 [ Being duect wages (24, 600 + 98,400 May 3, Wook-in-Preogres at Dr 1, 23,000 To Wages Control ald 1,23,000 [Being direct allocated to production

758,600, 58,600 er 68,400 58,600 6400 1,81,600 May swages Congelrol, ale Dr.168.400 58,600 To Cash (Bank al 68,190 CBeing indirect paid wages May 31 Factory ahead All Being en ouelt wagy To wages Control ale charged out production Mayish Factory Our head ala Dr 1,81,600 ale C [Being May 31 Other Oueshead, ale To Cash Bank Ale Being other expenses naved May 31 Cubokun - Proguess Contorplate A 196,975 "To Factory 11,86,935 Control ale Being factory ouer head, applied to shoduction) 150% 26,250 = 34,375 1207. od 1,23,000 =147,600 paid factory care spalloon Or -65,000 65.000 May ay

UFE INSURANCE CORPORATION OF INDIA 1,47, 600 97,000 May 31 Firushed goode Control ale 08447600 Being goode Forneloaded to finished goode) May 31 Ferrushed Goode control ale pr. 976000 Being tinched goode Groduced] May 31 Coet of Salle All Dr 9,76,000 Finched 9,76,000 [Being cost of finished goode sold ] May 31 Cash I Bank Ale Dr.9,76,000 To salie Alc 19,76,000 Being sale of timehed goode cont her goode