Question 21.5: Prepare a cost of goods sold budget for Landon Awards Co. us...
Prepare a cost of goods sold budget for Landon Awards Co. using the information in Example Exercises 21-3 and 21-4. Assume the estimated inventories on January 1, 2014, for finished goods and work in process were $54,000 and $47,000, respectively. Also assume the desired inventories on December 31, 2014, for finished goods and work in process were $50,000 and $49,000, respectively. Factory overhead was budgeted for $126,000.
Finished goods inventory, January 1, 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 54,000
Work in process inventory, January 1, 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . $ 47,000
Direct materials:
Direct materials inventory, January 1, 2014
(240,000 × $0.12, from EE 21-3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 28,800
Direct materials purchases (from EE 21-3) . . . . . . . . . . . . . . . . . . . . . . . . 536,640
Cost of direct materials available for use. . . . . . . . . . . . . . . . . . . . . . . . . $565,440
Less direct materials inventory, December 31, 2014
(200,000 × $0.12, from EE 21-3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24,000
Cost of direct materials placed in production . . . . . . . . . . . . . . . . . . . . $541,440
Direct labor (from EE 21-4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103,400
Factory overhead . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 126,000
Total manufacturing costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 770,840
Total work in process during period. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $817,840
Less work in process inventory, December 31, 2014 . . . . . . . . . . . . . . . . . . 49,000
Cost of goods manufactured . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 768,840
Cost of finished goods available for sale. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $822,840
Less finished goods inventory, December 31, 2014 . . . . . . . . . . . . . . . . . . . 50,000
Cost of goods sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . \underline{\underline{\$ \ 772,840}}