Question

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		$
			$
			$

Answer 1

DAYBOOK INC.
Cost of Goods Sold Budget
For the Year Ending December 31, 20Y6
Finished goods inventory, January 1, 20Y6			28000
Work in process inventory, January 1, 20Y6		16500
Direct materials:
Direct materials inventory, January 1, 20Y6	16160
Direct materials purchase	967800
Cost of direct materials available for use	983960
Less direct materials inventory, December 31, 20Y6	15560
Cost of direct materials placed in production	968400
Direct labor	699400
Factory overhead	214600
Total manufacturing costs		1882400
Total work in process during period		1898900
Less work in process inventory, December 31, 20Y6		14300
Cost of goods manufactured			1884600
Cost of finished goods available for sale			1912600
Less finished goods inventory, December 31, 20Y6			30000
Cost of goods sold			1882600