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Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094

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BuyFindarrow_forward

Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094
Textbook Problem

Cost of goods sold budget

The controller of MingWare Ceramics Inc. wants to prepare a cost of goods sold budget for September. The controller assembled the following information for constructing the cost of goods sold budget:

Direct materials: Enamel Paint Porcelain Total
Total direct materials purchases budgeted for September $36,780 $6,130 $145,500 $188,410
Estimated inventory, September 1 1,240 950 4,250 6,440
Desired inventory, September 30 1,890 1,070 5,870 8,830
Direct labor cost: Kiln Department Decorating Department Total
Total direct labor cost budgeted for September $47,900 $145,700 $193,600
Finished goods inventories: Dish Bowl Figurine Total
Estimated inventory, September 1 $5,780 $3,080 $2,640 $11,500
Desired inventory. September 30 3,710 2,670 3,290 9.670
Work in process inventories:
Estimated inventory, September 1 $3,400
Desired inventory, September 30 1,990
Budgeted factory overhead costs for September  
Indirect factory wages $ 81,900
Depreciation of plant and equipment 14,300
Power and light 5,200
Indirect materials 4,100
Total $105,500

Use the preceding information to prepare a cost of goods sold budget for September.

To determine

Budgeting is a process to prepare the financial statement by the manager to estimate the organization’s future actions. It is also helpful to satisfy the everyday activities.

To Prepare: The cost of goods sold budget of Company M.

Explanation

The following table shows the cost of goods sold budget.

M Company
Cost of Goods Sold Budget
For the month ending September 30
Particulars Amount ($) Amount ($) Amount ($)
Finished goods inventory, September 1     11,500
Work-in-process inventory, September 1   3,400  
Direct material:      
  Direct materials inventory, September 1 6,440    
  Direct materials purchases 188,410    
Cost of direct materials available for use 194,850    
Less: Direct materials inventory, September 30 (8,830) ...

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