Question

Delaware Chemical Company uses oil to produce two types of plastic products, P1 and P2. Delaware budgeted 26,600 barrels of oil for purchase in June for $66 per barrel. Direct labor budgeted in the chemical process was $228,200 for June. Factory overhead was budgeted at $316,000 during June. The inventories on June 1 were estimated to be:

Oil	$16,000
P1	10,700
P2	9,100
Work in process	13,200

The desired inventories on June 30 were:

Oil	$17,600
P1	9,800
P2	8,700
Work in process	13,700

Use the preceding information to prepare a cost of goods sold budget for June. For those boxes in which you must enter subtracted or negative numbers use a minus sign.

Delaware Chemical Company
Cost of Goods Sold Budget
For the Month Ending June 30
			$
		$
Direct materials:
	$
	$
	$
		$
			$
			$
			$

Answer 1

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Beginning Inventory:
P1					$     10,700
P2					$        9,100
Beginning Work in Process Inventory				$     13,200	$     19,800
Direct Materials:
Beginning Inventory		$     16,000
Add: Purchases (26,600*$66)		$1,755,600
		$1,771,600
Less: Ending Inventory		$    -17,600
Direct Material Cost			$1,754,000
Direct Labor			$   228,200
Overheads			$   316,000
Cost incurred during period				$2,298,200
				$2,311,400
Less: Ending Work in process Inventory				$    -13,700
Cost of goods manufactured					$2,297,700
Cost of Finished goods available for sale					$2,317,500
Less: Ending Finished Goods Inventory	$9,800+$8,700				$    -18,500
Cost of goods Sold					$2,299,000