In: Accounting
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.
2. Prepare summary journal entries dated May 31
to record the following production activities during May: (a) raw
materials purchases, (b) direct materials usage, (c) indirect
materials usage, (d) direct labor costs incurred, (e) indirect
labor costs incurred, (f) payment of factory payroll, (g) other
overhead costs, (h) overhead applied, (i) goods transferred from
production to finished goods, and (j) sale of finished
goods.