Cost of goods sold budget Pasadena Candle Inc. budgeted production of 785,000 ca
ID: 2538174 • Letter: C
Question
Cost of goods sold budget
Pasadena Candle Inc. budgeted production of 785,000 candles for the year. Each candle requires molding. Assume that six minutes are required to mold each candle. If molding labor costs $18 per hour, determine the direct labor cost budget for the year. Wax is required to produce a candle. Assume 487,125 pounds of material will be purchased during the year. If candle wax costs $1.24 per pound, determine the direct materials purchases for the year.
Prepare a cost of goods sold budget for Pasadena Candle Inc. using the information above. Assume the estimated inventories on January 1 for finished goods and work in process were $200,000 and $41,250, respectively and direct materials wax inventory of 16,000 pounds. Also assume the desired inventories on December 31 for finished goods and work in process were $120,000 and $28,500, respectively and direct materials wax inventory of 12,500 pounds. Factory overhead was budgeted at $300,000. For those boxes in which you must enter subtracted or negative numbers use a minus sign.
Pasadena Candle Inc. Cost of Goods Sold Budget For the Year Ending December 31 Finished goods inventory, January 1 $ Work in process inventory, January 1 $ Direct materials: Direct materials inventory, January 1 $ Direct materials purchases Cost of direct materials available for use $ Direct materials inventory, December 31 Cost of direct materials placed in production $ Direct labor Factory overhead Total manufacturing costs Total work in process during period $ Work in process inventory, December 31 Cost of goods manufactured Cost of finished goods available for sale $ Finished goods inventory, December 31 Cost of goods sold $Explanation / Answer
Pasadena Candle Inc. Cost of Goods Sold Budget For the Year Ending December 31 Finished goods inventory, January 1 200000 Work in process inventory, January 1 41250 Direct materials: Direct materials inventory, January 1 16000 Direct materials purchases 604035 Cost of direct materials available for use 620035 Direct materials inventory, December 31 12500 Cost of direct materials placed in production 607535 Direct labor 1413000 Factory overhead 300000 Total manufacturing costs 2320535 Total work in process during period 2361785 Work in process inventory, December 31 28500 Cost of goods manufactured 2333285 Cost of finished goods available for sale 2533285 Finished goods inventory, December 31 120000 Cost of goods sold 2413285