Final answer:
The cost of goods sold (COGS) for Elton Inc. is calculated by adding production costs and adjusting for changes in the inventory of finished goods. Since the total vases produced are 6,100 and the production cost per vase is $15, Elton Inc.'s COGS is $91,500. Option B.
Step-by-step explanation:
To calculate the cost of goods sold (COGS) for Elton Inc., we need to account for both the production costs and the change in inventory levels of finished goods. The total production costs can be determined by multiplying the cost per vase by the total number of vases produced.
However, since the ending inventory of finished goods is higher than the beginning inventory, not all produced goods were sold. Here's the step-by-step calculation:
Calculate production costs: (Direct materials + Direct labor + Manufacturing overhead) per vase × Total vases produced
Determine total vases produced: Since there is no work-in-process inventory change and direct materials inventory remains the same, we can assume that all the vases produced are equal to the vases sold plus ending inventory minus beginning inventory.
Calculate the cost of goods manufactured: This is the cost of all goods that were finished during the year.
Calculate the cost of goods sold (COGS): Cost of goods manufactured + Beginning inventory - Ending inventory = COGS
Doing the math:
Production costs per vase = $2 + $10 + $3 = $15
Vases produced = Vases sold + Ending inventory of finished goods - Beginning inventory of finished goods
Vases produced = 6,000 + 500 - 400 = 6,100 vases
Total production costs = 6,100 vases × $15/vase = $91,500
COGS = $91,500 (Since there are no work-in-process changes and direct materials inventory remains the same, the total production costs equal COGS.)
Therefore, the correct answer for the cost of goods sold on the 2016 budgeted income statement is $91,500, which is option B.