PE 22-5B Cost of goods sold budget

Prepare a cost of goods sold budget for Magnolia Candle Co., using the information in Practice Exercises 22-3B and 22-4B. Assume the estimated inventories on January 1, 2014, for finished goods and work in process were $9,800 and $3,600, respectively. Also assume the desired inventories on December 31, 2014, for finished goods and work in process were $12,900 and $3,500, respectively. Factory overhead was budgeted at $109,600.

Answer:

Finished goods inventory, January 1, 2014   $ 9,800 
Work in process inventory, January 1, 2014  $ 3,600  
Direct materials:    
Direct materials inventory, January 1, 2014    
(2,500 × $4.10) $  10,250   
Direct materials purchases (from PE 22–3B) 150,470   
Cost of direct materials available for use $160,720   
Less direct materials inventory,    
December 31, 2014 (2,100 × $4.10) 8,610   
Cost of direct materials placed in    
production $152,110   
Direct labor (from PE 22–4B) 207,760   
Factory overhead 109,600   
Total manufacturing costs  469,470  
Total work in process during period  $473,070  
Less work in process inventory, December 31, 2014  3,500  
Cost of goods manufactured   469,570 
Cost of finished goods available for sale   $479,370 
Less finished goods inventory, December 31, 2014   12,900 
Cost of goods sold   $466,470