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
Raw materials inventory	$ 66,000	$ 79,450
Work in process inventoryCutting	163,500	120,500
Work in process inventoryStitching	183,300	97,700
Finished goods inventory	44,100	32,250

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

Direct materials
Raw materials purchased on credit	$ 85,000
Direct materials usedCutting	24,750
Direct materials usedStitching	0

Direct labor
Direct laborCutting	$ 21,600
Direct laborStitching	86,400

Factory Overhead (Actual costs)
Indirect materials used	$ 46,800
Indirect labor used	57,400
Other overhead costs	59,000

Factory Overhead Rates
Cutting	150% of direct materials used
Stitching	120% of direct labor used
Sales	$ 736,000

Problem 20-5A (Algo) Part 1

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. Hint: Compute the total production costs in each department and then subtract the ending inventory to get the amount transferred out of each department.