Question

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
			$
		$
Direct materials:
	$
	$
Cost of direct materials placed in production	$
Total work in process during period		$
			$
			$

Answer 1

Solution

Daybook Inc.
Cost of goods sold budget
For the Year ending Dec 31 20Y6
Finished goods inventory -Jan 1			$          28,000
Work in process inventory Jan 1		$          16,500
Direct materials used
Raw material Inventory Beginning	$          16,160
Raw material Purchased	$        160,800
Raw material available for use	$        176,960
Less: Raw material Inventory Ending	$          15,560
Direct Material Used	$        161,400
Direct labor	$        699,400
Manufacturing Overheads	$        214,600
Total manufacturing cost incurred during the year		$    1,075,400
Total manufactiuring cost to account for		$    1,091,900
Less: WIP inventory, Dec 31		$          14,300
Cost of goods manufactured			$    1,077,600
Goods available for sale			$    1,105,600
Less: Ending Finished goods inventory			$          30,000
Cost of goods sold			$    1,075,600