Question

Joshua Hill, Sheridan & Hill Fabricators production manager, has just received the company's sales budget for the first quarter: Budgeted unit sales Budgeted ending inventory Total units required Beginning inventory Budgeted production January 11,600 4,524 16,124 3,248 12,876 February 22,620 4,060 26,680 4,524 22,156 March 20,300 3,364 23,664 4,060 19,604 Quarter 54,520 3,364 57,884 3,248 54,636 Its manufacturing overhead budget for the first quarter is as follows: DLH worked VOH per DLH Budgeted VOH Budgeted FOH Total Budgeted MOH Noncash MOH items Depreciation Total Cash MOH cost January 3,219 $0.70 2,253 65,250 67,503 February 5,539 $0.70 3,877 65,250 69,127 March 4,901 $0.70 3,431 65,250 68,681 Quarter 13,659 $0.70 9,561 195,750 205,311 17,400 17,400 $51,727 17,400 $51,281 52,200 $153,111

Joshua plans to have 3,248 finished bricks at a cost of $28,420 in inventory at the beginning of the year. The company applies manufacturing overhead based on direct labor hours, and the current predetermined rates are $12 per direct labor hour for fixed manufacturing overhead and $0.70 per direct labor hour for variable manufacturing overhead.

Prepare Sheridan & Hill’s ending inventory and cost of goods sold budget for the first quarter. Assuming that the company has no beginning and ending WIP inventory.

Answer 1

Direct Materials
Beginning DM inventory	$4,385	10962*0.4
DM Purchases	$108,112	270280*0.4
DM used in Production	$109,272	273180*0.4
Ending DM inventory	$3,225	8062*0.4
Finished Good Inventory
Unit Costs:
Direct Material	$2.000	5*0.4
Direct Labor	$5.000	0.25*20
Overhead	$3.175	0.25*(12+0.7)
Total Std. Cost per unit	$10.175
Ending FG inventory (units)	3,364	Given
Ending FG inventory ($)	$34,229
Cost of Goods sold
Beginning WIP	$0	Given
Direct Material used	$109,272	Above
Direct Labor	$273,180	Given
Overhead	$205,311	Given
Total Mfg. cost	$587,763
Ending WIP	$0	Given
COGM	$587,763
Beginning FG inventory	$28,420	Given
Ending FG inventory	$34,229	Above
Budgeted COGS	$581,954