Question

Cost of Goods Sold Budget

Delaware Chemical Company uses oil to produce two types of plastic products, P1 and P2. Delaware budgeted 15,800 barrels of oil for purchase in June for $63 per barrel. Direct labor budgeted in the chemical process was $119,400 for June. Factory overhead was budgeted at $179,200 during June. The inventories on June 1 were estimated to be:

Oil	$8,400
P1	5,600
P2	4,800
Work in process	6,900

The desired inventories on June 30 were:

Oil	$9,200
P1	5,100
P2	4,500
Work in process	7,200

Use the preceding information to prepare a cost of goods sold budget for June. For those boxes in which you must enter subtracted or negative numbers use a minus sign.

Delaware Chemical Company
Cost of Goods Sold Budget
For the Month Ending June 30
			$
		$
Direct materials:
	$
	$
	$
		$
			$
			$
			$

Answer 1

SOLUTION

Cost of goods sold budget-

Particulars	Amount ($)	Amount ($)	Amount ($)
Finished goods inventory, June 1 (5,600+4,800)			10,400
Work in progress inventory, June 1		6,900
Direct material-
Direct material inventory	8,400
Direct material purchased (15,800*$63)	995,400
Cost of direct material available for use	1,003,800
Less: Ending direct material inventory	(9,200)
Cost of direct material placed in production	994,600
Direct Labor	119,400
Factory overheads	179,200
Total manufacturng costs		1,293,200
Total work in progress during period		1,300,100
Less: Work in progress inventory, June 30		(7,200)
Cost of goods manufactured			1,292,900
Cost of finished goods available for sale			1,303,300
Less: Finished goods inventory, June 30 (5,100+4,500)			(9,600)
Cost of goods sold			1,293,700