Question

1.

Direct Materials Purchases Budget

Pasadena Candle Inc. budgeted production of 785,000 candles for January. Wax is required to produce a candle. Assume 10 ounces of wax is required for each candle. The estimated January 1 wax inventory is 16,000 pounds. The desired January 31 wax inventory is 12,500 pounds. If candle wax costs $1.24 per pound, determine the direct materials purchases budget for January. (One pound = 16 ounces.) For those boxes in which you must enter subtracted or negative numbers use a minus sign.

Pasadena Candle Inc.
Direct Materials Purchases Budget
For the Month Ending January 31
Pounds of wax required for production:
Candles
Desired ending inventory, January 31
Total units available
Estimated beginning inventory, January 1
Total pounds to be purchased
Unit price (per lb.)
Total direct materials to be purchased in January

2.

Pasadena Candle Inc. budgeted production of 785,000 candles for January. 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 January. Wax is required to produce a candle. Assume 487,125 pounds of material will be purchased during January. The candle wax costs $1.24 per pound.

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 January 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 Month Ending January 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, January 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, January 31
Cost of goods manufactured
Cost of finished goods available for sale
Finished goods inventory, January 31
Cost of goods sold

Answer 1

2

2

Answer
Pasadena Candle Inc.
Cost of goods sold Budget
For the Month Ending January 31
Finished goods Inventory, Janurary 1			$            200,000
Work in process, January 1		$              41,250
Direct material
Direct material Inventory, January 1	$              19,840
Direct materials purchases	$            604,035
Cost of goods available for use	$            623,875
Direct material Inventory, January 31	$              15,500
Cost of direct material placed in production	$            608,375
Direct labor	$         1,413,000
Factory overhead	$            300,000
Total Manufacturing costs		$         2,321,375
Total work in process during period		$         2,362,625
Work in process, January 31		$              28,500
Cost of goods manufactured			$         2,334,125
Cost of finished goods available for sale			$         2,534,125
Finished goods Inventory, Janurary 31			$            120,000
Cost of goods sold			$         2,414,125