Question

Pro-Weave manufactures stadium blankets by passing the products through a weaving department and a sewing department. The following information is available regarding its June inventories:

	Beginning Inventory			Ending Inventory
Raw materials inventory	$	182,000		$	221,000
Work in process inventory—Weaving		475,000			480,000
Work in process inventory—Sewing		705,000			945,000
Finished goods inventory		1,366,000			1,336,000

The following additional information describes the company’s manufacturing activities for June:

Raw materials purchases (on credit)	$	665,000
Factory payroll cost (paid in cash)		3,460,000
Other factory overhead cost (Other Accounts credited)		216,000
Materials used
Direct—Weaving	$	280,000
Direct—Sewing		90,000
Indirect		132,000
Labor used
Direct—Weaving	$	1,375,000
Direct—Sewing		560,000
Indirect		1,525,000
Overhead rates as a percent of direct labor
Weaving		85	%
Sewing		165	%
Sales (on credit)	$	5,200,000

1. Compute the (a) cost of products transferred from weaving to sewing, (b) cost of products transferred from sewing to finished goods, and (c) cost of goods sold.
2. Prepare journal entries dated June 30 to record (a) goods transferred from weaving to sewing, (b) goods transferred from sewing to finished goods, (c) sale of finished goods, and (d) cost of goods sold.

Answer 1

Answer - 1

a - Cost of product transferred from weaving to sewing:

	Particulars	Amount	Explanation
I	Inventory at the beginning	475000	Given in question
II	Material (direct)	280000	Given in question
III	Labor (direct)	1375000	Given in question
IV	Overhead applied	1168750	1375000 * 85%
V	Total cost weaving	3298750	I + II + III + IV
VI	Inventory at the end	480000	Given in question
	Transferred to sewing	2818750	V - VI

b - Cost of product transferred from Sewing to Finished goods:

	Particulars	Amount	Explaination
I	Inventory at the beginning	700000	Given in question
II	Material (direct)	90000	Given in question
III	Labor (direct)	560000	Given in question
IV	Overhead applied	924000	560000 * 165%
V	Transferred from weaving	2818750	Calculated in (a)
VI	Total cost Sewing	5092750	I + II + III + IV + V
VII	Inventory at the end	945000	Given in question
	Transferred to finished goods	4147750	V - VII

c - Cost of goods sold:

	Particulars	Amount	Explaination
I	Inventory at the beginning	1366000	Given in question
II	Transferred from Sewing	4147750	Calculated in (b)
III	Finished goods at the end	1336000	Given in question
	Cost of goods sold	4177750	I + II - III

Answer - 2

No.	Date	General Journal	Debit	Credit
a	June 30	Work in process inventory - Sewing	2818750
		Work in process inventory - Weaving		2818750
b	June 30	Finished goods inventory	4147750
		Work in process inventory - Sewing		4147750
c	June 30	Accounts receivable	5200000
		Sales		5200000
d	June 30	Cost of goods sold	4177750
		Finished goods inventory		44177750