Question

[The following information applies to the questions displayed below.] 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: Beginning Inventory Ending Inventory Work in process inventory—Cutting 183,500 130,500 Work in process inventory—Stitching 203,300 103,900 Finished goods inventory 48,100 36,250 The following additional information describes the company's production activities for May. Direct materials Raw materials purchased on credit $ 95,000 Direct materials used—Cutting 25,250 Direct materials used—Stitching 0 Direct labor Direct labor—Cutting $ 22,600 Direct labor—Stitching 90,400 Total factory payroll paid (in cash) 170,800 Factory Overhead (Actual costs) Indirect materials used $ 54,000 Indirect labor used 57,800 Other overhead costs 61,000 Factory Overhead Rates Cutting (150% of direct materials used ) Stitching (120% of direct labor used ) Sales $816,000

Problem 20-1A Part 1 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

	Information	Beginning Inventory	Ending inventory
	Work In process Inventory-Cutting	183500	130500
	Work In process Inventory-Stiching	203300	103900
	Finished Goods iNventory	48100	36250
	Raw material Purchased	95000
	Direct material used-Cutting	25250
	Direct material used-Stiching	0
	Direct labor -cutting	22600
	Direct labor -Stiching	90400
	Total direct labor F	113000
	Total factory paid T	170800
	Actual cost
	Indirect material	54000
	Indirect labor	57800
	Other	61000
	Total	172800
	Factory overhead rate for Cutting	150% of Direct material used
	Factory overhead rate for Stiching	120% of direct labor used
	(a) production costs transferred from Cutting to Stitching,	$165845
	Work in process-Cutting Beginning bal+Direct material+direct labor+Manufactuirng overhead-ending WIP balance
	(183500+22600+25250+64955-130500)	165845
	Calcualtion of manufactirng overhead
	Work In process Inventory_cutting (150%*2520)+(120%22600)	64995
	b) production costs transferred from Stitching to finished goods,	298280
	Work in process-Stiching Beginning bal+Direct material+direct labor+Manufactuirng overhead-ending WIP balance-stitching
	203300+0+90400+108480-103900	$298280
	Calcualtion of manufactirng overhead
	Work In process Inventory-Stiching (90400*120%)	108480
	c) cost of good sold	$310130
	Bginning Finished goods inventory+COGM-Ending Finished goods inventory
	(48100+298280-36250)	310130
If any doubt please comment