Question

22-2

1) Cost of Goods Sold Budget

Daybook Inc. budgeted production of 403,500 personal journals in 20Y6. Paper is required to produce a journal. Assume six square yards of paper are required for each journal. The estimated January 1, 20Y6, paper inventory is 40,400 square yards. The desired December 31, 20Y6, paper inventory is 38,900 square yards. Paper costs $0.40 per square yard.

Each journal requires assembly. Assume that eight minutes are required to assemble each journal. Assembly labor costs $13.00 per hour.

Prepare a cost of goods sold budget for Daybook Inc. using the information above. Assume the estimated inventories on January 1, 20Y6, for finished goods and work in process were $28,000 and $16,500, respectively. Also assume the desired inventories on December 31, 20Y6, for finished goods and work in process were $30,000 and $14,300, respectively. Factory overhead was budgeted at $214,600. Round your interim calculations to nearest cent, if required.

DAYBOOK INC.
Cost of Goods Sold Budget
For the Year Ending December 31, 20Y6
Finished goods inventory, January 1, 20Y6			$
		$
Direct materials:
	$
	$
Cost of direct materials placed in production	$
Total work in process during period		$
			$
			$

2)  

Direct Labor Cost Budget

Daybook Inc. budgeted production of 403,500 personal journals in 20Y6. Each journal requires assembly. Assume that eight minutes are required to assemble each journal.

If assembly labor costs $13.00 per hour, determine the direct labor cost budget for 20Y6. Round your interim calculations to nearest cent, if required.
$

Answer 1

Budgeted production	403,500
Material required per unit	6
Budgeted direct material required for production	2,421,000
Add: Ending direct material inventory	38,900
Less: Beginning direct material inventory	40,400
Budgeted direct material purchases	2,419,500
Cost per square yard	$0.40
Cost of direct material purchases	$967,800

Budgeted production	403,500
Direct labor hour required per unit (8/60)	0.133333
Direct labor hours required	53,800
Cost per direct labor hour	$13
Budgeted direct labor cost	$699,400

1.

DAYBOOK INC. Cost of Goods Sold Budget For The Year Ending December 31, 20Y6
Finished goods inventory, January 1, 20Y6			$28,000
Work in process inventory, January 1, 20Y6		$16,500
Direct materials:
Direct material inventory, January 1, 20Y6 (40,400*$0.40)	$16,160
Direct material purchases	967,800
Cost of direct material available	983,960
Less: Direct material inventory, December 31, 20Y6 (38,900*$0.40)	15,560
Cost of direct material placed in production	968,400
Direct labor	699,400
Factory overhead	214,600
Total manufacturing costs		1,882,400
Total work in process during period		$1,898,900
Less: Work in process inventory, December 31, 20Y6		14,300
Cost of goods manufactured			1,884,600
Cost of goods available			1,912,600
Less: Finished goods inventory, December 31, 20Y6			30,000
Cost of goods sold			$1,882,600

2.

DAYBOOK INC. Direct Labor Cost Budget
Budgeted production	403,500
Direct labor hour required per unit (8/60)	0.133333
Direct labor hours required	53,800
Cost per direct labor hour	$13
Budgeted direct labor cost	$699,400