Cost of Goods Sold Budget MyLife Chronicles Inc. budgeted production of 238,900
ID: 2595376 • Letter: C
Question
Cost of Goods Sold Budget
MyLife Chronicles Inc. budgeted production of 238,900 diaries in 2016. Paper is required to produce a diary. Assume five square yards of paper are required for each diary. The estimated January 1, 2016, paper inventory is 32,400 square yards. The desired December 31, 2016, paper inventory is 30,800 square yards. Paper costs $0.30 per square yard. Each diary requires assembly. Assume that six minutes are required to assemble each diary. Assembly labor costs $12.00 per hour.
Prepare a cost of goods sold budget for MyLife Chronicles Inc. using the information above. Assume the estimated inventories on January 1, 2016, for finished goods and work in process were $25,000 and $19,000, respectively. Also assume the desired inventories on December 31, 2016, for finished goods and work in process were $31,500 and $16,700, respectively. Factory overhead was budgeted at $197,100. Round your interim calculations to nearest cent, if required.
MyLife Chronicles Inc. Cost of Goods Sold Budget For the Year Ending December 31, 2016 Finished goods inventory, January 1, 2016 $ Work in process inventory, January 1, 2016 $ Direct materials: Direct materials inventory, January 1, 2016 $ Direct materials purchases Cost of direct materials available for use $ Less direct materials inventory, December 31, 2016 Cost of direct materials placed in production $ Direct labor Factory overhead Total manufacturing costs Total work in process during period $ Less work in process inventory, December 31, 2016 Cost of goods manufactured Cost of finished goods available for sale $ Less finished goods inventory, December 31, 2016 Cost of goods sold $Explanation / Answer
MyLife Chronicles Inc. Cost of Goods Sold Budget For the Year Ending December 31, 2016 Finished Goods Inventory, January 1, 2016 $25,000 Work In Process Inventory, January 1, 2016 $19,000 Direct Materials: Direct materials Inventory, January 1, 2016 (32,400 x $0.30) $9,720 Direct Materials Purchases [(238,900 x 5) + 30,800 - 32,400] x $0.30 $357,870 Cost of direct materials available for use $367,590 Less: Direct materials inventory, December 31, 2016 (30,800 x $0.30) ($9,240) Cost of direct materials placed in production $358,350 Direct Labor [(238,900 x 6/60) x $12] $286,680 Factory Overhead $197,100 Total manufacturing costs $842,130 Total work in process during period $861,130 Less: Work in Process Inventory, December 31, 2016 ($16,700) Cost of Goods Manufactured $844,430 Cost of finished goods available for sale $869,430 Less: Finished Goods Inventory, December 31, 2016 ($31,500) Cost of Goods Sold $837,930