Question

Sleep Tight manufactures comforters. The estimated inventories on January 1 for finished goods, work in process, and materials were $40,000, $31,000, and $28,000, respectively. The desired inventories on December 31 for finished goods, work in process, and materials were $44,000, $36,000, and $23,000, respectively. Direct material purchases were $580,000, direct labor was $227,000 for the year, and factory overhead was $144,000.

Required:
Prepare a cost of goods sold budget for Sleep Tight, Inc. Refer to the lists of

Labels and Amount Descriptions for the exact wording of the answer choices for text entries. “Less” or “Plus” will automatically appear if it is required. Be sure to complete the statement heading.

Answer 1

Solution:

Sleep tight Inc.
Cost of goods sold Budget
For the year ending Dec 31
Finished goods inventory, Jan 1			$40,000.00
Work in process inventory, Jan1		$31,000.00
Direct materials:
Direct materials, Jan 1	$28,000.00
Direct materials purchases	$580,000.00
Cost of direct materials available for sale	$608,000.00
Less: Direct materials inventory, Dec 31	$23,000.00
Cost of direct materials placed in production	$585,000.00
Direct labor	$227,000.00
Factory overhead	$144,000.00
Total manufacturing costs		$956,000.00
Total work in process during the period		$987,000.00
Less: Work in process inventory, Dec 31		$36,000.00
Cost of goods manufactured			$951,000.00
Cost of finished goods available for sale			$991,000.00
Less: Finished goods inventory, Dec 31			$44,000.00
Cost of goods sold			$947,000.00