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. BeginningInventoryEndingInventory$ 97,900135,500107,00038,250Raw materials inventoryWork in process inventory-CuttingWork in process inventory-StitchingFinished goods inventory$ 81,000193,500213,30050,100The following additional information describes the company's production activities for May.Direct materialsRaw materials purchased on creditct materialsDirect materials used-Stitching$ 100,00025,500sed-CuttingDirect laborDirect labor-CuttingDirect labor-Stitching$ 23,10092,400Factory Overhead (Actual costs)$ 57,60058,00062,000Indirect materials usedIndirect labor usedOther overhead costsFactory Overhead RatesCuttingStitching150% of direct materials used120% of direct labor usedSales$ 856,000

Answered: Compute the amount of (a) production…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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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.

Beginning
Inventory
Ending
Inventory
$ 97,900
135,500
107,000
38,250
Raw materials inventory
Work in process inventory-Cutting
Work in process inventory-Stitching
Finished goods inventory
$ 81,000
193,500
213,300
50,100
The following additional information describes the company's production activities for May.
Direct materials
Raw materials purchased on credit
ct materials
Direct materials used-Stitching
$ 100,000
25,500
sed-Cutting
Direct labor
Direct labor-Cutting
Direct labor-Stitching
$ 23,100
92,400
Factory Overhead (Actual costs)
$ 57,600
58,000
62,000
Indirect materials used
Indirect labor used
Other overhead costs
Factory Overhead Rates
Cutting
Stitching
150% of direct materials used
120% of direct labor used
Sales
$ 856,000

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Process costing refers to an accounting system which is used by manufacturing companies who are producing large number of similar products. It is used to assign the cost of products in a systematic manner.

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