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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

	Beginning Inventory			Ending Inventory
Raw materials inventory	$	66,000		$	43,000
Work in process inventory		404,000			541,000
Finished goods inventory		602,000			532,000

The following additional information describes the company's production activities for May.

Raw materials purchases (on credit)	$	250,000
Factory wages cost (paid in cash)		1,562,000
Other overhead cost (Other Accounts credited)		98,000
Materials used
Direct	$	195,000
Indirect		78,000
Labor used
Direct	$	790,000
Indirect		772,000
Overhead rate as a percent of direct labor		120	%
Sales (on credit)	$	5,500,000

Raw Materials (RM)					Work in Process (WIP)
Factory Wages Payable					Finished Goods (FG)
Factory Overhead					Income Statement (Partial)
					Cost of goods transferred
					Cost of goods sold

Answer 1

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Raw Materials					Work in process
RM - April 30	$             66,000	$       78,000	Indirect materials		WIP - April 30	$   4,04,000	$ 17,96,000	Cost of goods transferred
RM Purchases	$         2,50,000	$   1,95,000	DM used		DM used	$   1,95,000
					DL used	$   7,90,000
					Overhead applied	$   9,48,000
RM - May 31	$             43,000				WIP - May 30	$   5,41,000
Finished Goods					Factory overhead
FG - April 30	$         6,02,000	$ 18,66,000	Cost of Goods Sold		Indirect material	$       78,000	$     9,48,000	Overhead applied
Cost of goods transferred	$       17,96,000				Indirect labor	$   7,72,000
					Other overhead cost	$       98,000
Finished goods - May 31	$         5,32,000				Balance	$                -
Income statement					Factory wages Payable
Sales	$       55,00,000				Cash	$ 15,62,000	$     7,72,000	Indirect labor
Less: Cost of goods sold	$     -18,66,000						$     7,90,000	DL used
Gross Profit	$       36,34,000				Balance	$                -
Cost of goods transferred	$       17,96,000
Cost of goods sold	$       18,66,000