roblem 20-1A Production cost flow and measurement; journal entries L.O. P1, P2,

ID: 2377821 • Letter: R

Question

roblem 20-1A Production cost flow and measurement; journal entries L.O. P1, P2, P3, P4

[The following information applies to the questions displayed below.]

Edison Company manufactures wool blankets and accounts for product costs using process costing. The following information is available regarding its May inventories.

Compute the cost of products transferred from production to finished goods.

Compute the cost of goods sold

Edison Company manufactures wool blankets and accounts for product costs using process costing. The following information is available regarding its May inventories.

Explanation / Answer

cost of goods transferred and cost of good sold

begining goods in process inventory

$401,000

direct materials used in production

$217,000

direct labour used in production

$1,104,000

overhead applied (115% of direct labour)

$1,269,600

total production costs

$2,991,000

less ending goods in process inventory

($542,500)

transferred to finished good inventory(a)

$2,448,500

beginning finished goods inventory

$634,000

plus goods transferred from production

$2,448,500

goods available for sale

$3,082,500

less ending finished goods inventory

($536,001)

cost of goods sold (b)

$2,546,499