Answer:
Opening finished goods Inventory $36,000
Add Cost of Goods Manufactured $944,000
Less Closing finished goods Inventory ($42,000)
Cost of Goods Sold $938,000
Explanation:
Step 1 Calculate Raw Material Costs requisitioned for manufacturing.
Materials Requisites = Opening Raw Materials Inventory + Purchases of Raw Materials - Closing Stock of Raw Materials
= $36,000+$580,000-$19,000
= $ 597,000
Step 2 Calculate Cost of Goods Manufactured
Raw Materials $597,000
Direct labor $202,000
Factory overhead $144,000
Add Opening work in process Inventory $34,000
Less Closing work in process Inventory ($33,000)
Cost of Goods Manufactured $944,000
Step 3 Calculate the Cost of Goods Sold
Opening finished goods Inventory $36,000
Add Cost of Goods Manufactured $944,000
Less Closing finished goods Inventory ($42,000)
Cost of Goods Sold $938,000
Answer:
Sleep Tight, Inc.
Cost of Goods Sold Budget:
RAW MATERIALS COSTS
January 1 Inventory of materials = $26,000
Direct Materials Purchases = $580,000
Less December 31 Inventory = $19,000
Cost of Materials used in production = $587,000
PRODUCTION COSTS
January 1 work in process = $34,000
Cost of materials used in production = $587,000
Direct Labour = $202,000
Factory Overhead = $144,000
less December 31 work in process = $33,000
Cost of goods produced = $934,000
FINISHED GOODS COSTS
January 1 Finished Goods = $36,000
Cost of goods produced = $934,000
less December 31 Finished Goods = $42,000
Cost of Goods Sold = $928,000
Explanation:
An alternative way to prepare the above budget would be to add all the opening inventories to purchases, direct labour, and factory overhead. From the total, deduct the closing inventories.
January 1 Inventory of materials = $26,000
January 1 work in process = $34,000
January 1 Finished Goods = $36,000
Direct Materials Purchases = $580,00
Direct Labour = $202,000
Factory Overhead = $144,000
a) Total = $1,022,000
less:
December 31 Inventory = $19,000
December 31 work in process = $33,000
December 31 Finished Goods = $42,000
b) Total = $94,000
Cost of Goods Sold (a-b) = $928,000
However, this second approach is lacking in details. As such, it is not very informative. The first arrangement displayed the cost of raw materials used for production, cost of goods produced, and then the cost of goods sold.
