Cost of Goods Sold Budget Magnolia Candle Inc. budgeted production of 74,200 can
ID: 2474177 • Letter: C
Question
Cost of Goods Sold Budget
Magnolia Candle Inc. budgeted production of 74,200 candles in 2016. Wax is required to produce a candle. Assume eight ounces (one-half of a pound) of wax is required for each candle. The estimated January 1, 2016, wax inventory is 2,500 pounds. The desired December 31, 2016, wax inventory is 2,100 pounds. Candle wax costs $4.10 per pound.
Each candle requires molding. Assume that 12 minutes are required to mold each candle. Molding labor costs $14.00 per hour.
Prepare a cost of goods sold budget for Magnolia Candle Inc., using the information above. Assume the estimated inventories on January 1, 2016, for finished goods and work in process were $9,800 and $3,600, respectively. Also assume the desired inventories on December 31, 2016, for finished goods and work in process were $12,900 and $3,500, respectively. Factory overhead was budgeted at $109,600. Round your interim calculations to nearest cent, if required.
Magnolia Candle Inc. Cost of Goods Sold Budget For the Year Ending December 31, 2016 $ $ Direct materials: $ $ Cost of direct materials placed in production $ Total work in process during the period $ $ $Explanation / Answer
Answer:
Magnolia Candle Inc. COGS budget For the Year Ending December 31, 2016 Finished goods inventory, January 1, 2016 9800 Work in process inventory, January 1, 2016 3600 Direct materials: Direct materials inventory, January 1, 2016 10250 Direct materials purchases 150470 Cost of direct materials available for use 160720 Less: ending direct material inventory 8610 Cost of direct materials placed in production 152110 Direct labor 207760 Factory overhead 109600 Total manufacturing costs 469470 Total work in process during the period 473070 Less work in process inventory, December 31, 2016 3500 Cost of goods manufactured 469570 Cost of finished goods available for sale 479370 Less finished goods inventory, December 31, 2016 12900 Cost of goods sold 466470