Preparing a Cost of Goods Sold Budget Andrews Company manufactures a line of off
ID: 2445580 • Letter: P
Question
Preparing a Cost of Goods Sold Budget
Andrews Company manufactures a line of office chairs. Each chair takes $14 of direct materials and uses 1.9 direct labor hours at $14 per direct labor hour. The variable overhead rate is $1.20 per direct labor hour and the fixed overhead rate is $1.80 per direct labor hour. Andrews Company expects to produce 20,000 chairs next year and expects to have 730 chairs in ending inventory. There is no beginning inventory of chairs.
Direct Materials $
Direct Labor $
Variable Overhead $
Fixed Overhead $
Total Manufacturing Cost $
Less: Ending Inventory $
Cost of Goods Sold $
Explanation / Answer
Answer - $892201
Calculation of Cost of goods sold Budget Particulars Amount in $ Amount in $ Direct material used in production( $14 per chair *20000) 280000 Direct labour budgeted(1.9*$14*20000) 532000 Variable overhead (1.9*$1.2*20000) 45600 Fixed overhead(1.9*$1.8*20000) 68400 Cost of goods manufactured of 20000 chair 926000 Add- Opening finished goods 0 Goods Available for sale(20000 chair) 926000 Less-closing budgeted finished goods(730 chair@ $46.3 per chair) 33799 Cost of goods sold of (20000-730=19270 ) chair @$46.3 per chair 892201