Question

Pasadena Candle Inc. budgeted production of 785,000 candles for January. Each candle requires molding. Assume that six minutes are required to mold each candle. If molding labor costs $18 per hour, determine the direct labor cost budget for January. Wax is required to produce a candle. Assume 487,125 pounds of material will be purchased during January. The candle wax costs $1.24 per pound.

Prepare a cost of goods sold budget for Pasadena Candle Inc. using the information above. Assume the estimated inventories on January 1 for finished goods and work in process were $200,000 and $41,250, respectively and direct materials wax inventory of 16,000 pounds. Also assume the desired inventories on January 31 for finished goods and work in process were $120,000 and $28,500, respectively and direct materials wax inventory of 12,500 pounds. Factory overhead was budgeted at $300,000. For those boxes in which you must enter subtracted or negative numbers use a minus sign.

Pasadena Candle Inc.
Cost of Goods Sold Budget
For the Month Ending January 31
Finished goods inventory, January 1
Work in process inventory, January 1
Direct materials:
Direct materials inventory, January 1
Direct materials purchases
Cost of direct materials available for use
Direct materials inventory, January 31
Cost of direct materials placed in production
Direct labor
Factory overhead
Total manufacturing costs
Total work in process during period
Work in process inventory, January 31
Cost of goods manufactured
Cost of finished goods available for sale
Finished goods inventory, January 31
Cost of goods sold

Answer 1

Pasadena Candle Inc.
Cost of Goods Sold Budget
For the Month Ending January 31
Finished goods inventory, January 1			200000
Work in process inventory, January 1		41250
Direct materials:
Direct materials inventory, January 1	16000
Direct materials purchases	604035			=487125*1.24
Cost of direct materials available for use	620035
Direct materials inventory, January 31	-12500
Cost of direct materials placed in production	607535
Direct labor	1413000			=785000*(6/60)*18
Factory overhead	300000
Total manufacturing costs		2320535
Total work in process during period		2361785
Work in process inventory, January 31		-28500
Cost of goods manufactured			2333285
Cost of finished goods available for sale			2533285
Finished goods inventory, January 31			-120000
Cost of goods sold			2413285