Problem - Edison Company manufactures wool blankets and accounts for product costs using process costing. The following information is available regarding its May inventories.
|
Beginning
Inventory
|
Ending
Inventory
|
|
Raw materials inventory
|
$28,000
|
$25,500
|
|
Goods in process inventory
|
220,750
|
252,000
|
|
Finished goods inventory
|
319,000
|
277,000
|
The following additional information describes the company's production activities for May.
|
Raw materials purchases (on credit)
|
$135,000
|
|
Factory payroll cost (paid in cash)
|
791,500
|
|
Other overhead cost (Other Accounts credited)
|
43,000
|
|
Materials used
|
|
|
Direct
|
$93,500
|
|
Indirect
|
31,000
|
|
Labor used
|
|
|
Direct
|
$352,000
|
|
Indirect
|
439,500
|
|
Overhead rate as a percent of direct labor
|
110%
|
|
Sales (on credit)
|
$1,500,000
|
Required -
(a) Compute the cost of products transferred from production to finished goods.
(b) Compute the cost of goods sold.