Sierra Company manufactures woven blankets and accounts for product costs using

Question

Sierra Company manufactures woven 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 and cost of goods sold.

Goods In Process (GIP)

Factory Payroll

Finished Goods (FG)

Factory Overhead

Income statment (partial)

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, and (j) sale of finished goods.

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

Explanation / Answer

Solution- Raw Materials (RM) Goods in process Opening Stock $     66,000 Indirect Material $     86,000 Opening Stock $   410,000 Closing Stock $   569,000 Purchased $   290,000 Material Consumed (Balancng Figure) $   213,500 Material Consumed $   213,500 Cost of goods manufactured $1,753,000 Closing stock $     56,500 DL used $   790,000 Overhead applied $   908,500 $   356,000 $   356,000 $2,322,000 $2,322,000 Finished Goods (FG) Factory Overhead Opening Stock $   612,000 Cost of goods sold $1,784,999 Indirect Material $     86,000 Overhead applied $   908,500 Cost of goods manufactured $1,753,000 Indirect labor $   767,000 (115% of D/L 790,000) Closing stock $   580,001 Other overhead cost $     55,500 Under applied OH $           -   $2,365,000 $2,365,000 $   908,500 $   908,500 Direct Labor   Income Statement Factory Payroll $1,557,000 Indirect Labor $   767,000 Sales $3,500,000 DL used $   790,000 Cost of good Sold $1,784,999 Gross Profit $1,715,001 $1,557,000 $1,557,000

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