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		53,500			65,500
Work in process inventory—Stitching		73,300			63,600
Finished goods inventory		22,100			10,250

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

Direct materials
Raw materials purchased on credit	$	30,000
Direct materials used—Cutting		22,000
Direct materials used—Stitching		0

Direct labor
Direct labor—Cutting	$	16,100
Direct labor—Stitching		64,400
Total factory payroll paid (in cash)		135,700

Factory Overhead (Actual costs)
Indirect materials used	$	7,200
Indirect labor used		55,200
Other overhead costs		48,000

Factory Overhead Rates
Cutting	(150% of direct materials used			)
Stitching	(120% of direct labor used			)
Sales	$296,000

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.

Work in Process (WIP) - Cutting
Work in Process (WIP) - Stitching
Finished Goods (FG)

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, (credit Other Accounts), (h) overhead applied, (i) goods transferred from Cutting to Stitching, (j) goods transferred from Stitching to finished goods, (k) cost of goods sold, and (l) sales.

Answer rating: 100% (QA)

1 A Cost of goods manufacturing Cutting for the month of May Amount in Direct materials 22000 Add Direct Labor 16100 Add Factory overheads 22000150 33... View the full answer