Question

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	$64,000	$45,000
Work in process inventory	412,000	593,000
Finished goods inventory	630,000	597,000

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

Raw materials purchases (on credit)	$260,000
Factory wages cost (paid in cash)	1,542,000
Other overhead cost (Other Accounts credited)	47,000
Materials used
Direct	$191,000
Indirect	88,000
Labor used
Direct	$780,000
Indirect	762,000
Overhead rate as a percent of direct labor	115%
Sales (on credit)	$6,500,000

The predetermined overhead rate was computed at the beginning of the year as 115% of direct labor cost.

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

Answer 1