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Sierra Company manufactures woven blankets and accounts for product costs using process costing. The following information is available regarding its May inventories.
Sierra Company manufactures woven blankets and accounts for product costs
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
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