Question

Magnolia Candle Inc. budgeted production of 74,200 candles in 20Y4. Wax is required to produce a candle. Assume that eight ounces (one-half of a pound) of wax is required for each candle. The estimated January 1, 20Y4, wax inventory is 2,500 pounds. The desired December 31, 20Y4, wax inventory is 2,100 pounds. Candle wax costs $4.10 per pound.

Each candle requires molding. Assume that 12 minutes are required to mold each candle. Molding labor costs $14.00 per hour.

Prepare a cost of goods sold budget for Magnolia Candle Inc., using the information above. Assume that the estimated inventories on January 1, 20Y4, for finished goods and work in process were $9,800 and $3,600, respectively. Also assume that the desired inventories on December 31, 20Y4, for finished goods and work in process were $12,900 and $3,500, respectively. Factory overhead was budgeted at $109,600. Round your interim calculations to nearest cent, if required.

MAGNOLIA CANDLE INC. Cost of Goods Sold Budget For the Year Ending December 31, 2014 Direct materials: Cost of direct materials placed in production $ Total work in process during the period

Answer 1

Answer with working is given below

$9,800 $3,600 MAGNOLIA CANDLE INC. Cost of Goods Sold Budget For the Year Ending December 31, 2014 Opening Stock of Finished Goods Opening Work in process Direct Materials Opening Inventory $10,250 Purchases $150,470 Total Material available $160,720 Closing Inventory $8,610 Cost of Direct Material placed in production $152, 110 Direct Labor $207,760 Factory Overhead $109,600 Factory cost of production Total work in process during the period Closing Work in process Cost of Goods manufactured Total Cost of Finished goods available for sale Closing stock of Finished Goods Cost of Goods Sold $469,470 $473,070 $3,500 $469,570 $479,370 $12,900 $466,470 Calculation of Purchases (Units) Raw Material needed for production Add: Closing inventory Total requirements Less: Opening Inventory Total Purchases of Wax 37,100 2,100 39,200 2,500 36,700 Labor for production (Units * 0.20 hours * $14 per hour)