Cost of Goods Sold Budget Daybook Inc. budgeted production of 403,500 personal j
ID: 2532924 • Letter: C
Question
Cost of Goods Sold Budget
Daybook Inc. budgeted production of 403,500 personal journals in 20Y6. Paper is required to produce a journal. Assume six square yards of paper are required for each journal. The estimated January 1, 20Y6, paper inventory is 40,400 square yards. The desired December 31, 20Y6, paper inventory is 38,900 square yards. Paper costs $0.40 per square yard.
Each journal requires assembly. Assume that eight minutes are required to assemble each journal. Assembly labor costs $13.00 per hour.
Prepare a cost of goods sold budget for Daybook Inc. using the information above. Assume the estimated inventories on January 1, 20Y6, for finished goods and work in process were $28,000 and $16,500, respectively. Also assume the desired inventories on December 31, 20Y6, for finished goods and work in process were $30,000 and $14,300, respectively. Factory overhead was budgeted at $214,600. Round your interim calculations to nearest cent, if required.
DAYBOOK INC. Cost of Goods Sold Budget For the Year Ending December 31, 20Y6 Finished goods inventory, January 1, 20Y6 $ $ Direct materials: $ $ Cost of direct materials placed in production $ Total work in process during period $ $ $Explanation / Answer
DAYBOOK INC.
Cost of Goods Sold Budget
For the year ending December 31, 2016
Finished Goods Inventory, Januray 1, 2016
$28,000
Work in Inventory, Januray 1, 2016
$16,500
Direct Materials:
Direct Materials Inventory, Januray 1, 2016
$16,160
Direct Materials Purchased (403500 X 6 yards X $0.40)
$968,400
Cost of Direct Materials available to use
$984,560
Less: Direct Materials Inventory, December 31, 2016
$15,560
Cost of Direct Materials placed in production
$969,000
Direct Labour [(403500 X 8 min)/60 mins X 13 per hour)
$699,400
Factory Overhead
$214,600
Total Manufacturing Cost
$1,883,000
Total Work in Inventory during the period
$1,899,500
Less: Work in Inventory, December 31, 2016
$14,300
Cost of Goods Manufactured
$1,885,200
Cost of Finished Goods available for sale
$1,913,200
Less: Finished Goods Inventory, December 31,2016
$30,000
Cost of Goods Sold
$1,883,200
DAYBOOK INC.
Cost of Goods Sold Budget
For the year ending December 31, 2016
Finished Goods Inventory, Januray 1, 2016
$28,000
Work in Inventory, Januray 1, 2016
$16,500
Direct Materials:
Direct Materials Inventory, Januray 1, 2016
$16,160
Direct Materials Purchased (403500 X 6 yards X $0.40)
$968,400
Cost of Direct Materials available to use
$984,560
Less: Direct Materials Inventory, December 31, 2016
$15,560
Cost of Direct Materials placed in production
$969,000
Direct Labour [(403500 X 8 min)/60 mins X 13 per hour)
$699,400
Factory Overhead
$214,600
Total Manufacturing Cost
$1,883,000
Total Work in Inventory during the period
$1,899,500
Less: Work in Inventory, December 31, 2016
$14,300
Cost of Goods Manufactured
$1,885,200
Cost of Finished Goods available for sale
$1,913,200
Less: Finished Goods Inventory, December 31,2016
$30,000
Cost of Goods Sold
$1,883,200