Question

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. Ifr molding labor costs $18 per hour, 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. Pasadena Candle Inc. Cost of Goods Sold Budget For the Year Ending December 31 Direct materials Cost of direct materials placed in production Previous Next Check My Work

Answer 1

Direct Materials purchased for the year:

Candle Wax [487,125 pounds * $1.24 per pound] = $604,035

Direct Labor cost budget for the year [785,000 candles * 6 minutes/60 mins per hour* $18 per hour] =$14,13,000

Cost of Goods Sold Budget

Direct Materials:

Opening Inventory on 1 January [16,000 pounds * 1.24 per pound] = $19,840

(+) Purchases = $604,035

(-) Closing Inventory on 31 January [12,500 pounds * 1,24 per pound] = ($15,500)

Cost of Direct Materials in Production = $608.375

Direct Labour Cost = $14,13,000

Factory Overheads Cost = $300,000

Opening Work in Progress Inventory on 1 January = $41,250

(-) Closing Work in Progress Inventory on 31 January = ($ 28,500)

Total work in progress during the period = $20,34,125

Opening Finished Goods on 1 January = $200,000

(-) Closing Finished Goods on 31 January = ($120,000)

Cost of Goods Sold = $21,14,125