Question

[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.

  

	Beginning Inventory			Ending Inventory
Raw materials inventory	$	60,000		$	92,500
Work in process inventory		435,000			515,000
Finished goods inventory		633,000			605,000

  

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

  

Raw materials purchases (on credit)	$	250,000
Factory payroll cost (paid in cash)		1,530,000
Other overhead cost (Other Accounts credited)		87,000
Materials used
Direct	$	157,500
Indirect		60,000
Labor used
Direct	$	780,000
Indirect		750,000
Overhead rate as a percent of direct labor		115	%
Sales (on credit)	$	2,500,000

The predetermined overhead rate was computed at the beginning of the year as 115% of direct labor cost.

rev: 09_05_2017_QC_CS-97362

1.

value:
10.00 points

Required information

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

          

Answer 1

Cost of products transferred from production to Finished goods = $2,617,000.

Cost of goods sold = $2,645,000.