Question

Pasadena Candle Inc. budgeted production of 785,000 candles for January. Each candle requires molding. Assume that six minutes are required to mold each candle. If molding labor costs $18 per hour, determine the direct labor cost budget for January. Wax is required to produce a candle. Assume 487,125 pounds of material will be purchased during January. The candle wax costs $1.24 per pound. Prepare a cost of goods sold budget for Pasadena Candle Inc. using the information above. Assume the estimated inventories on January 1 for finished goods and work in process were $200,000 and $41,250, respectively and direct materials wax inventory of 16,000 pounds. Also assume the desired inventories on January 31 for finished goods and work in process were $120,000 and $28,500, respectively and direct materials wax inventory of 12,500 pounds. Factory overhead was budgeted at $300,000. For those boxes in which you must enter subtracted or negative numbers use a minus sign.

Answer 1

$2,414,125

Step-by-step explanation:

Preparation of a cost of goods sold budget for Pasadena Candle Inc

Pasadena Candle Inc. COST OF GOODS SOLD BUDGET For the Year Ending December 31

Finished goods inventory, January 1 $200,000

Work in process inventory, January 1 $41,250

DIRECT MATERIALS:

Direct materials inventory, January 1 $19,840

Direct materials purchases $60,4035

Cost of direct materials available for use $62,3875

Direct materials inventory, December 31 $15,500

Cost of direct materials placed in production $608,375

Direct labor $1,413,000

Factory overhead $300,000

TOTAL manufacturing costs $2,321,375

Total work in process during period $2,362,625

($41,250+$2,321,375)

Work in process inventory, December 31 $28,500

Cost of goods manufactured $2,334,125

($2,362,625-­$28,500)

Cost of finished goods available for sale $2,534,125

($2,334,125+$200,000)

Finished goods inventory, December 31 ­$120,000

COST OF GOODS SOLD $2,414,125

($2534125-­$120,000)

Therefore The cost of goods sold budget for Pasadena Candle Inc will be $2,414,125