Question

Cost of Goods Sold Budget

Wilmington Chemical Company uses oil to produce two types of plastic products, P1 and P2. Wilmington budgeted 16,200 barrels of oil for purchase in June for $65 per barrel. Direct labor budgeted in the chemical process was $126,400 for June. Factory overhead was budgeted $189,500 during June. The inventories on June 1 were estimated to be:

Oil	$8,800
P1	5,900
P2	5,100
Work in process	7,300

The desired inventories on June 30 were:

Oil	$9,700
P1	5,400
P2	4,800
Work in process	7,600

Use the preceding information to prepare a cost of goods sold budget for June.

Wilmington Chemical Company
Cost of Goods Sold Budget
For the Month Ending June 30
Finished goods inventory, June 1			$
Work in process inventory, June 1		$
Direct materials:
Direct materials inventory, June 1	$
Direct materials purchases
Cost of direct materials available for use	$
Less direct materials inventory, June 30
Cost of direct materials placed in production	$
Direct labor
Factory overhead
Total manufacturing costs
Total work in process during the period		$
Less work in process inventory, June 30
Cost of goods manufactured
Cost of finished goods available for sale			$
Less finished goods inventory, June 30
Cost of goods sold			$

Answer 1

Wilmington Chemical Company
Cost of Goods Sold Budget
For the Month Ending June 30
Finished goods inventory, June 1			$             11,000
Work in process inventory, June 1		7,300
Direct materials:
Direct materials inventory, June 1	8,800
Direct materials purchases	10,53,000
Cost of direct materials available for use	10,61,800
Less direct materials inventory, June 30	9,700
Cost of direct materials placed in production	10,52,100
Direct labor	1,26,400
Factory overhead	1,89,500
Total manufacturing costs		13,68,000
Total work in process during the period		13,75,300
Less work in process inventory, June 30		7,600
Cost of goods manufactured			13,67,700
Cost of finished goods available for sale			13,78,700
Less finished goods inventory, June 30			10,200
Cost of goods sold			$       13,68,500
Working:
		P1	P2		Total
Beginning Finished goods Inventory		$       5,900	$                5,100		$          11,000
Cost of direct materials purchased	=	16200*65	=		10,53,000
		P1	P2		Total
Ending Finished goods Inventory		$       5,400	$                4,800		$          10,200