Prepare a budgeted statement of cost of goods sold. 9/18/2018 WileyPLUS Problem
ID: 2335483 • Letter: P
Question
Prepare a budgeted statement of cost of goods sold.
9/18/2018 WileyPLUS Problem 21-6A (Part Level Submission) Krause Industries' balance sheet at December 31, 2016, is presented below. KRAUSE INDUSTRIES Balance Sheet December 31, 2016 Assets Current Assets Cash Accounts receivable Finished goods inventory (1,500 units) $7,500 73,500 24,000 105,000 Total current assets Property, Plant, and Equipment $40,000 10,000 30,000 Total assets $135,000 Liabilities and Stockholders Equity Liabilities Notes payable $25,000 45,000 70,000 Accounts payable Total liabilities Stockholders Equity Common stock $40,000 Retained earnings 25,000 Total stockholders' equity 65,000 Total liabilities and stockholders' equity $135,000 Budgeted data for the year 2017 include the following 2017 Quarter 4 Total Sales budget (8,000 units at $32) $76,800 $256,000 62,500 50,900 48,600 75,000 Direct materials used Direct labor Manufacturing overhead applied Selling and administrative expenses 11,000 12,500 10,000 15,000 To meet sales requirements and to have 2,500 units of finished goods on hand at December 31, 2017, the production budget shows 9,000 required units of output. The total unit cost of production is expected to be $18. Krause uses the first-in, first-out (FIFO) inventory costing method. Interest expense is expected to be $3,500 for the year. Income taxes are expected to be 40% of income before income taxes. In 2017, the company expects to declare and pay an $8,000 cash dividend The company's cash budget shows an expected cash balance of $5,880 at December 31, 2017. All sales and purchases are on account. It is expected that 60% of quarterly sales are collected in cash within the quarter and the remainder is collected in the following quarter. Direct materials purchased from suppliers are paid 50% in the quarter incurred and the remainder in the followi materials used. In 2017, the company expects to purchase additional equipment costing $9,000. $7,000 of ing quarter. Purchases in the fourth quarter were the same as theExplanation / Answer
Solution:
Krause Industries Budgeted cost of goods sold For the year ending December 31, 2017 Particulars Amount Cost of goods sold: Cost of goods manufactured: Direct materials used $62,500.00 Direct labor $50,900.00 Manufacturing overhead applied $48,600.00 Total manufacturing cost $162,000.00 Add: Beginning finished goods inventory $24,000.00 Cost of goods available for sale $186,000.00 Less: Ending finished goods inventory (2500*$18) $45,000.00 Budgeted cost of goods sold $141,000.00