Sierra Company manufactures woven blankets and accounts for product costs using process costing. The company uses a single processing department. The following information is available regarding its May inventories :
Beginning Inventory Ending Inventory
Raw materials inventory $61,000 $70,500
Work in process inventory 419,500 531,000
Finished goods inventory 614,000 430,001
The following additional information describes the company's production activities for May :
Raw materials purchases (on credit) 280,000
Factory payroll cost (paid in cash) 1,541,000
Other overhead cost (Other Accounts credited) 67,500
Materials used
Direct 180,500
Indirect 90,000
Labor used
Direct 790,000
Indirect 751,000
Overhead rate as a percent of direct labor 115%
Sales (on credit) 5,500,000
The predetermined overhead rate was computed at the beginning of the year as 115% of direct labor cost
1. Compute the cost of products transferred from production to finished goods and cost of goods sold.
2. Prepare summary journal entriesdated May 31 to record the following production activities during May:
a) Raw-materials purchases.
b) Direct materials usage.
c) Indirect materials usage.
d) Direct labor costs incurred.
e) Indirect labor costs incurred.
f) Payment of factory payroll.
g) Other overhead costs.
h) Overhead applied.
i) Goods transferred from production to finished goods.
j) Sale of finished goods.