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 | |||||
Work in process inventoryCutting | 183,500 | 130,500 | ||||
Work in process inventoryStitching | 203,300 | 103,900 | ||||
Finished goods inventory | 48,100 | 36,250 | ||||
The following additional information describes the company's production activities for May.
Direct materials | ||||||
Raw materials purchased on credit | $ | 95,000 | ||||
Direct materials usedCutting | 25,250 | |||||
Direct materials usedStitching | 0 | |||||
Direct labor | ||||||
Direct laborCutting | $ | 22,600 | ||||
Direct laborStitching | 90,400 | |||||
Total factory payroll paid (in cash) | 170,800 | |||||
Factory Overhead (Actual costs) | ||||||
Indirect materials used | $ | 54,000 | ||||
Indirect labor used | 57,800 | |||||
Other overhead costs | 61,000 | |||||
Factory Overhead Rates | |||||||
Cutting | (150% of direct materials used | ) | |||||
Stitching | (120% of direct labor used | ) | |||||
Sales | $816,000 | ||||||
Problem 20-1A 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.
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