Question

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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	$50,000	$71,000
Work in process inventory	446,500	533,000
Finished goods inventory	619,000	502,000

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

Raw materials purchases (on credit)	$270,000
Factory wages cost (paid in cash)	1,575,000
Other overhead cost (Other Accounts credited)	16,000
Materials used
Direct	$181,000
Indirect	68,000
Labor used
Direct	$790,000
Indirect	785,000
Overhead rate as a percent of direct labor	110%
Sales (on credit)	$4,500,000

The predetermined overhead rate was computed at the beginning of the year as 110% of direct labor cost.

rev: 09_05_2017_QC_CS-97362

Required:
1. Compute the cost of products transferred from production to finished goods and cost of goods sold.

Answer 1