Question
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
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 | $ 106,000 | $ 128,650 |
Work in process inventoryCutting | 243,500 | 160,500 |
Work in process inventoryStitching | 263,300 | 122,500 |
Finished goods inventory | 60,100 | 48,250 |
The following additional information describes the company's production activities for May.
Direct materials | |
---|---|
Raw materials purchased on credit | $ 125,000 |
Direct materials usedCutting | 26,750 |
Direct materials usedStitching | 0 |
Direct labor | |
---|---|
Direct laborCutting | $ 25,600 |
Direct laborStitching | 102,400 |
Factory Overhead (Actual costs) | |
---|---|
Indirect materials used | $ 75,600 |
Indirect labor used | 59,000 |
Other overhead costs | 67,000 |
Factory Overhead Rates | |
---|---|
Cutting | 150% of direct materials used |
Stitching | 120% of direct labor used |
Sales | $ 1,056,000 |
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. Hint: Compute the total production costs in each department and then subtract the ending inventory to get the amount transferred out of each department.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started