Sierra Company manufactures woven blankets and accounts for product costs using process costing. The following information is
Question:
The following additional information describes the companys production activities for May.
Raw materials purchases (on credit) . . . . . . . . . . . . . . . . . . . $ 250,000
Factory payroll cost (paid in cash) . . . . . . . . . . . . . . . . . . . . . 1,530,000
Other overhead cost (Other Accounts credited) . . . . . . . . . . 87,000
Materials used Direct . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 157,500
Indirect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60,000
Labor used Direct . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 780,000
Indirect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 750,000
Overhead rate as a percent of direct labor . . . . . . . . . . . . . . . 115%
Sales (on credit) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,500,000
Required
1. Compute the cost of
(a) Products transferred from production to finished goods,
(b) Goods sold.
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) Payroll costs,
(e) Direct labor costs,
(f) Indirect labor costs,
(g) Other overhead costs,
(h) Overhead applied,
(i) Goods transferred from production to finished goods,
(j) Sale of finishedgoods.
Step by Step Answer:
Fundamental accounting principle
ISBN: 978-0078025587
21st edition
Authors: John J. Wild, Ken W. Shaw, Barbara Chiappetta