Question

Magnolia Candle Inc. budgeted production of 74,200 candles in 20Y4. Wax is required to produce a candle. Assume that eight ounces (one-half of a pound) of wax is required for each candle. The estimated January 1, 20Y4, wax inventory is 2,500 pounds. The desired December 31, 20Y4, wax inventory is 2,100 pounds. Candle wax costs $4.10 per pound.

Each candle requires molding. Assume that 12 minutes are required to mold each candle. Molding labor costs $14.00 per hour.

Prepare a cost of goods sold budget for Magnolia Candle Inc., using the information above. Assume that the estimated inventories on January 1, 20Y4, for finished goods and work in process were $9,800 and $3,600, respectively. Also assume that the desired inventories on December 31, 20Y4, for finished goods and work in process were $12,900 and $3,500, respectively. Factory overhead was budgeted at $109,600. Round your interim calculations to nearest cent, if required.

MAGNOLIA CANDLE INC.
Cost of Goods Sold Budget
For the Year Ending December 31, 20Y4
			$
		$
Direct materials:
	$
	$
Cost of direct materials placed in production	$
Total work in process during the period		$
			$
			$

Answer 1

	Cost of Goods Sold Budget
	For the Year Ending December 31,2014
		$	$	$
	Finished Goods Inventory January 01 2014			9,800
	Work in process Inventory January 01 2014		3,600
	Direct Material :
	Direct Material Inventory January 01,2014	10,250
	Add : Direct Material Purchased	150,470
	Cost of Direct Material available for use	160,720
	Less : Direct Material Inventory December 31,2014	8,610
	Cost of Direct Material	152,110
	Direct Labor	207,760
	Factory Overhead	109,600
	Total Manufactuting Cost		469,470
	Total Work in process		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
	Direct Material Inventory January 01,2014	= 2500 ponds * $ 4.10 = $ 10,250
	Direct Material Purchased	= {( 74,200 units * 0.5 pound ) + 2,100 - 2,500} *$ 4.10 = $ 150,470
	Direct Material Inventory December 31,2014	= 2100 pounds * $ 4.10 = $ 8,610
	Direct Labor	= 74,200 * 12/60 * $ 14
		= $ 207,760