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

Raw materials inventory $ $26,000$ $ $30,250$

Work in process inventoryCutting $83,50080,500$

Work in process inventoryStitching $103,30072,900$

Finished goods inventory $28,10016,250$

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

Direct materials

Raw materials purchased on credit $ $45,000$

Direct materials usedCutting $22,750$

Direct materials usedStitching $0$

Direct labor

Direct laborCutting $ $17,600$

Direct laborStitching $70,400$

Factory Overhead $($Actual costs$)$

Indirect materials used $ $18,000$

Indirect labor used $55,800$

Other overhead costs $51,000$

Factory Overhead Rates

Cutting $150\%$ of direct materials used

Stitching $120\%$ of direct labor used

Sales $ $416,000$

Problem $16-5$A $($Algo$)$ 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. Hint: Compute the total production costs in each department and then subtract the ending inventory to get the amount transferred out of each department.

Answer rating: 100% (QA)

Answer To compute the amount of production costs transferred from Cutting to Stitching production costs transferred from Stitching to finished goods a... View the full answer