Question

Delaware Chemical Company uses oil to produce two types of plastic products, P1 and P2. Delaware budgeted 28,300 barrels of oil for purchase in June for $71 per barrel. Direct labor budgeted in the chemical process was $221,000 for June. Factory overhead was budgeted at $361,700 during June. The inventories on June 1 were estimated to be:

Answer 1

Question Completion:

The inventories on June 1 were estimated to be:

Oil $15,200

P1 8,500

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

The Cost of goods sold budgeted for June 2015 is:

= $2,597,500.

Step-by-step explanation:

a) Data and Calculations:

Budgeted purchase of barrels of oil for June = $2,009,300 (28,300 * $71)

Budgeted direct labor for June 221,000

Budgeted factory overhead for June 361,700

The inventories on June 1 were estimated to be:

Oil $15,200

P1 8,500

P2 8,600

Work in process 12,900

Beginning inventory $45,200

The desired inventories on June 30 were:

Oil $16,100

P1 9,400

P2 7,900

Work in process 13,500

Ending inventory $39,700

Cost of goods sold:

Beginning inventory $45,200

Budgeted purchase 2,009,300

Budgeted direct labor 221,000

Budgeted factory overhead 361,700

Ending inventory (39,700)

Cost of goods sold = $2,597,500