Question

h 21 - HW Cost of goods sold budget Pasadena Candle Inc. budgeted production of 785,000 candles for the year. Each candle requires molding. Assume that six minutes are required to mold each candle. If molding labor costs $18 per hou determine the direct labor cost budget for the year. Wax is required to produce a candle. Assume 487,125 pounds of material will be purchased during the year. If candle wax costs $1.24 per pound, determine the direct materials purchases for the year. 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 December 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.

Answer 1

				calculation
Finished Goods inventory January 1			200000
Work in process inventory January 1		41250
Direct material
Direct material inventory January 1	19840			[16000*1.24]
direct material purchase	604035			[487125*1.24]
cost of direct material available for use	623875			[19840+604035]
direct material inventory December 31	15500			[12500*1.24]
cost of direct material placed in production	608375			[623875-15500]
direct labor	1413000			[785000*1.8]
factory overhead	300000
total manufacturing cost		2321375		[1413000+300000+608375]
Total work in process during period		2362625		[41250+2321375]
work in process inventory december 31		28500
cost of goods manufactured			2334125	[2362625-28500]
cost of finished goods available for sale			2534125	[2334125+200000]
finished goods inventory december 31			120000
cost of goods sold			2414125	[2534125-120000]