Required information The following information applies to th

Required information

[The following information applies to the questions displayed below.]

Sierra Company manufactures woven blankets and accounts for product costs using process costing. Data below are for one of its processing departments. The following information is available regarding its May inventories

The following additional information describes the company\'s production activities for May.

The predetermined overhead rate was computed at the beginning of the year as 110% of direct labor cost.

1. Compute the cost of products transferred from production to finished goods and cost of goods sold.

	Beginning Inventory	Ending Inventory
Raw materials inventory	$	65,000		$	77,000
Work in process inventory		441,500			555,000
Finished goods inventory		632,000			517,000

Solution

Raw material Inventory Bal . 1/1 65000 Work in progress 238000 Purchase 250000 315000 238000 Bal . 1/31 77000 Work in progress inventory Bal . 1/1 441500 Finished goods 1724500 Direct material 158000 Direct labor 800000 Manufacturing overheads 880000 2279500 1724500 Bal . 1/31 555000 Finshed goods inventory Bal . 1/1 632000 Cost of goods sold 1839500 Work in progress 1724500 2356500 1839500 Bal 1/31 517000 Manufacturing overheads Indirect material 80000 Work in progress 880000 Indirect labor 762000 Other manufacturing overheads 38000 880000 880000 Income statement Sales 3500000 Cost of goods sold 1839500 Gross profit 1660500