Problem:
Edison Company manufactures wool blankets and accounts for production 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 material 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
Compute the cost of (a) products transferred from production to finished goods and (b) goods sold.