Sierra Company manufactures woven blankets and accounts forproduct costs using process costing. Data below...

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Accounting

Sierra Company manufactures woven blankets and accounts forproduct costs using process costing. Data below are for one of itsprocessing departments. The following information is availableregarding its May inventories
Beginning
Inventory Ending
Inventory
Raw materialsinventory $51,000 $90,000
Workin process inventory 413,500 539,000
Finished goods inventory 630,000 554,000

The following additional information describes the company'sproduction activities for May.
Raw materialspurchases (on credit) $280,000
Factory wages cost (paid in cash) 1,565,000
Other overhead cost (Other Accounts credited) 85,000
Materials used
Direct $175,000
Indirect 66,000
Labor used
Direct $780,000
Indirect 785,000
Overhead rate as a percent of direct labor 120%
Sales (on credit) $5,500,000

The predetermined overhead rate was computed at the beginning ofthe year as 120% of direct labor cost.
1. Compute the cost of products transferredfrom production to finished goods and cost of goods sold.
2. Prepare summary journal entries dated May 31to record the following production activities during May: (a) rawmaterials purchases, (b) direct materials usage, (c) indirectmaterials usage, (d) direct labor costs incurred, (e) indirectlabor costs incurred, (f) payment of factory payroll, (g) otheroverhead costs, (h) overhead applied, (i) goods transferred fromproduction to finished goods, and (j) sale of finished goods.

	Beginning Inventory	Ending Inventory
Raw materialsinventory	$51,000	$90,000
Workin process inventory	413,500	539,000
Finished goods inventory	630,000	554,000


Raw materialspurchases (on credit)	$280,000
Factory wages cost (paid in cash)	1,565,000
Other overhead cost (Other Accounts credited)	85,000
Materials used
Direct	$175,000
Indirect	66,000
Labor used
Direct	$780,000
Indirect	785,000
Overhead rate as a percent of direct labor	120%
Sales (on credit)	$5,500,000

Answer & Explanation Solved by verified expert

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Solution 1 Sierra Company Schedule of cost of goods manufactured For the month ended May 31 Particulars Amount Direct material 17500000 Direct labor 78000000 Applied overhead 120 of DL Cost 93600000 Total manufacturing costs 189100000 Add Beginning WIP 41350000 Total cost of work in process 230450000 Less Ending WIP 53900000 Cost of goods manufactured 176550000 See Answer

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In: AccountingSierra Company manufactures woven blankets and accounts forproduct costs using process costing. Data below are...Sierra Company manufactures woven blankets and accounts forproduct costs using process costing. Data below are for one of itsprocessing departments. The following information is availableregarding its May inventoriesBeginningInventoryEndingInventoryRaw materialsinventory$51,000$90,000Workin process inventory413,500539,000Finished goods inventory630,000554,000The following additional information describes the company'sproduction activities for May.Raw materialspurchases (on credit)$280,000Factory wages cost (paid in cash)1,565,000Other overhead cost (Other Accounts credited)85,000Materials usedDirect$175,000Indirect66,000Labor usedDirect$780,000Indirect785,000Overhead rate as a percent of direct labor120%Sales (on credit)$5,500,000The predetermined overhead rate was computed at the beginning ofthe year as 120% of direct labor cost.1. Compute the cost of products transferredfrom production to finished goods and cost of goods sold.2. Prepare summary journal entries dated May 31to record the following production activities during May: (a) rawmaterials purchases, (b) direct materials usage, (c) indirectmaterials usage, (d) direct labor costs incurred, (e) indirectlabor costs incurred, (f) payment of factory payroll, (g) otheroverhead costs, (h) overhead applied, (i) goods transferred fromproduction to finished goods, and (j) sale of finished goods.