Cost of Goods Sold Budget Universal Chemical Company uses oil to produce two typ
ID: 2541892 • Letter: C
Question
Cost of Goods Sold Budget
Universal Chemical Company uses oil to produce two types of plastic products, P1 and P2. Universal budgeted 22,600 barrels of oil for purchase in April for $72 per barrel. Direct labor budgeted in the chemical process was $179,000 for April. Factory overhead was budgeted $292,900 during April. The inventories on April 1 were estimated to be:
The desired inventories on April 30 were:
Use the preceding information to prepare a cost of goods sold budget for April 2017.
Oil $12,500 P1 8,400 P2 7,200 Work in process 10,400Explanation / Answer
Answer
Cost of Goods Sold Budget:
Universal Chemical Company
Cost of Goods Sold Budget
For the Month Ending April 30, 2017
Finished goods inventory, April 1, 2017(8400+7200)
$15600
Work in process inventory, April 1, 2017
$10400
Direct materials:
Direct materials inventory, April 1, 2017
$12500
Direct materials purchases(22600*$72)
$1627200
Cost of direct materials available for use
$1639700
Less direct materials inventory, April 30, 2017
($13800)
Cost of direct materials placed in production
$1625900
Direct labor
$179000
Factory overhead
$292900
Total manufacturing costs
$2097800
Total work in process during the period
$2108200
Less work in process inventory, April 30, 2017
($10700)
Cost of goods manufactured
$2097500
Cost of finished goods available for sale
$2113100
Less finished goods inventory, April 30, 2017(7700+6800)
($14500)
Cost of goods sold
$2098600
Universal Chemical Company
Cost of Goods Sold Budget
For the Month Ending April 30, 2017
Finished goods inventory, April 1, 2017(8400+7200)
$15600
Work in process inventory, April 1, 2017
$10400
Direct materials:
Direct materials inventory, April 1, 2017
$12500
Direct materials purchases(22600*$72)
$1627200
Cost of direct materials available for use
$1639700
Less direct materials inventory, April 30, 2017
($13800)
Cost of direct materials placed in production
$1625900
Direct labor
$179000
Factory overhead
$292900
Total manufacturing costs
$2097800
Total work in process during the period
$2108200
Less work in process inventory, April 30, 2017
($10700)
Cost of goods manufactured
$2097500
Cost of finished goods available for sale
$2113100
Less finished goods inventory, April 30, 2017(7700+6800)
($14500)
Cost of goods sold
$2098600