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. (a) Transferred to work in process-Stitching |(b) Transferred to finished goods (c) Cost of goods sold
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
![Requlred Informatlon
Problem 3-5A (Algo) Production cost flow and measurement; journal entries LO P3, P4
[The following Information applies to the questions displayed below.]
Slerra Company manufactures soccer balls In two sequentlal processes: Cutting and Stitching. All direct materials enter
production at the beginning of the cutting process. The following information Is avallable regarding Its May Inventories.
Beginning
Inventory
Ending
Inventory
$ 85,600
Raw materials inventory
Work in process inventory-Cutting
Work in process inventory-Stitching
Finished goods inventory
$ 71,000
173, 500
193, 300
125, 5e0
100,800
46,100
34,250
The following additional Information describes the company's production activitles for May.
Direct materials
$ 90,000
Raw materials purchased on credit
Direct materials used-Cutting
Direct materials used-Stitching
25,000
Direct labor
Direct labor-Cutting
Direct labor-Stitching
$ 22,100
88,400
Factory Overhead (Actual costs)
$ 50,400
57,600
Indirect materials used
Indirect labor used
Other overhead costs
68, 000
Factory Overhead Rates
Cutting
Stitching
150% of direct materials used
120% of direct labor used
Sales
$ 776,000](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fde73d8a3-703f-492e-8945-c6a65b8a92bf%2Fdbfa1d54-4091-4789-bf74-2c1b401ce6e9%2Fsr94wri_processed.png&w=3840&q=75)
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