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21 December, 15:12

Daybook Inc. budgeted production of 403,500 personal journals in 20Y6. Paper is required to produce a journal. Assume six square yards of paper are required for each journal. The estimated January 1, 20Y6, paper inventory is 40,400 square yards. The desired December 31, 20Y6, paper inventory is 38,900 square yards. Paper costs $0.40 per square yard. Each journal requires assembly. Assume that eight minutes are required to assemble each journal. Assembly labor costs $13.00 per hour. Prepare a cost of goods sold budget for Daybook Inc. using the information above. Assume the estimated inventories on January 1, 20Y6, for finished goods and work in process were $28,000 and $16,500, respectively. Also assume the desired inventories on December 31, 20Y6, for finished goods and work in process were $30,000 and $14,300, respectively. Factory overhead was budgeted at $214,600. Round your interim calculations to nearest cent, if required.

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  1. 21 December, 17:05
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    Direct Materials = $969,000

    Direct Labor = $699,400

    Factory overhead = $214,600

    WIP = $2,200

    Finished Goods = ($2,000)

    Cost of Goods = $1,883,200

    Explanation:

    Direct Materials = $969,000

    403,500 x 6 square yards = 2,421,000

    2,421,000 + (40,400 - 38,900) = 2,422,500

    2,422,500 x 0.40 per square yard = $969,000

    Direct Labor = $699,400

    403,500 personal journals

    403,500 * 8 minutes = 3,228,000 minutes

    3,228,000/60 minutes = 53,800

    53,800 x $13.00 = $699,400

    Prepare a cost of goods sold budget for Daybook Inc. using the information above

    Direct Materials = $969,000

    Direct Labor = $699,400

    Factory overhead = $214,600

    WIP ($16,500 - $14,300) = $2,200

    Finished Goods ($28,000 - $30,000) = ($2,000)

    Cost of Goods = $1,883,200
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