Delaware Chemical Company uses oil to produce two types of plastic products, P1 and P2. Delaware budgeted 35,000 barrels of oil for purchase in June for $90 per barrel. Direct labor budgeted in the chemical process was $240,000 for June. Factory overhead was budgeted $400,000 during June. The inventories on June 1 were estimated to be:
Oil . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $15,200
P1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,300
P2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,600
Work in process . . . . . . . . . . . . . . . . . . . . . . . . 12,900
The desired inventories on June 30 were:
Oil . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $16,100
P1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,400
P2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,900
Work in process . . . . . . . . . . . . . . . . . . . . . . . . . 13,500
Use the preceding information to prepare a cost of goods sold budget for June 2015.
Answer:
DELAWARE CHEMICAL COMPANY
Cost of Goods Sold Budget
For the Month Ending June 30, 2015
Finished goods inventory, June 11 $ 16,900
Work in process inventory, June 1 $ 12,900
Direct materials:
Direct materials inventory, June 1 $ 15,200
Direct materials purchases2 3,150,000
Cost of direct materials available for use $3,165,200
Less direct materials inventory, June 30 16,100
Cost of direct materials placed in
production $3,149,100
Direct labor 240,000
Factory overhead 400,000
Total manufacturing costs 3,789,100
Total work in process during the period $3,802,000
Less work in process inventory, June 30 13,500
Cost of goods manufactured 3,788,500
Cost of finished goods available for sale $3,805,400
Less finished goods inventory, June 303 17,300
Cost of goods sold $3,788,100
1 $8,300 + $8,600
2 35,000 barrels × $90 per barrel
3 $9,400 + $7,900
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