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. Direct materials. Raw materials purchased on credit Direct materials used-Cutting Direct materials used-Stitching Raw materials inventory Work in process inventory-Cutting Work in process inventory-Stitching Finished goods inventory The following additional information describes the company's production activities for May. Direct labor. Direct labor-Cutting Direct labor-Stitching Factory Overhead (Actual costs) Indirect materials used Indirect labor used Other overhead costs Factory Overhead Rates Cutting stitching $ 16,100 64,400 Sales Beginning Inventory $ 11,000 53,500 73,300 22,100 (a) Transferred to work in process-Stitching (b) Transferred to finished goods (c) Cost of goods sold $ 30,000 22,000 0 Ending Inventory $ 11,800 65,500 63,600 10,250 $ 7,200 55,200 48,000 150% of direct materials used 120% of direct labor used $ 296,000 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.
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. Direct materials. Raw materials purchased on credit Direct materials used-Cutting Direct materials used-Stitching Raw materials inventory Work in process inventory-Cutting Work in process inventory-Stitching Finished goods inventory The following additional information describes the company's production activities for May. Direct labor. Direct labor-Cutting Direct labor-Stitching Factory Overhead (Actual costs) Indirect materials used Indirect labor used Other overhead costs Factory Overhead Rates Cutting stitching $ 16,100 64,400 Sales Beginning Inventory $ 11,000 53,500 73,300 22,100 (a) Transferred to work in process-Stitching (b) Transferred to finished goods (c) Cost of goods sold $ 30,000 22,000 0 Ending Inventory $ 11,800 65,500 63,600 10,250 $ 7,200 55,200 48,000 150% of direct materials used 120% of direct labor used $ 296,000 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.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text: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.
Direct materials
Raw materials purchased on credit
Direct materials used-Cutting
Direct materials used-Stitching
Raw materials inventory
Work in process inventory-Cutting
Work in process inventory-Stitching
Finished goods inventory
The following additional information describes the company's production activities for May.
Direct labor
Direct labor-Cutting
Direct labor-Stitching
Factory Overhead (Actual costs)
Indirect materials used
Indirect labor used
Other overhead costs.
Factory Overhead Rates
Cutting
Stitching
$ 16,100
64,400
Sales
Beginning
Inventory
$ 11,000
53,500
73,300
22,100
(a) Transferred to work in process-Stitching
(b) Transferred to finished goods
(c) Cost of goods sold
$ 30,000
22,000
0
Ending
Inventory.
$ 11,800
$ 7,200
55,200
48,000
65,500
63,600
10,250
150 of direct materials used
120% of direct labor used
$ 296,000
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.
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