Question

Preparing a Cost of Goods Sold Budget Andrews Company manufactures a line of office chairs. Each chair takes $14 of direct materials and uses 1.9 direct labor hours at $16 per direct labor hour. The variable overhead rate is $1.20 per direct labor hour, and the fixed overhead rate is $1.60 per direct labor hour. Andrews expects to produce 20,000 chairs next year and expects to have 675 chairs in ending inventory. There is no beginning inventory of office chairs. Required: Prepare a cost of goods sold budget for Andrews Company Andrews Company Cost of Goods Sold Budget For the Coming Year Direct materials 280,000 Direct labor 532,000X Variable overhead 45,600 Fixed overhead 68,400X Total manufacturing cost 926,000X Less: Ending inventory X 46.3 Cost of goods sold 892,201 X

Answer 1

Andrew company

Cost of goods sold budget

For the coming year

Particulars	Amount ($)
Direct Materials [20,000 chairs * $ 14 ]	280,000
Direct Labor [20,000 chairs * 1.9 labor hours * $ 16 ]	608,000
Variable overheads [20,000 chairs * 1.9 labor hours * $ 1.20 ]	45,600
Fixed Overheads [20,000 chairs * 1.9 labor hours * $ 1.60 ]	60,800
Total Manufacturing Cost [$ 280,000 + $ 608,000 + $ 45,600 + $ 60,800 ]	994,400
Less Ending Inventory [ $ 994,400 * 675 / 20,000 ]	33,561
Cost of Goods Sold	960,839