Question

Sleep Tight, Inc., manufactures comforters. The estimated inventories on January 1 for finished goods, work in process, and materials were $37,000, $30,000, and $25,000, respectively. The desired inventories on December 31 for finished goods, work in process, and materials were $45,000, $35,000, and $19,000, respectively. Direct materials purchases were $560,000, direct labor was $232,000 for the year, and factory overhead was $147,000. Prepare a cost of goods sold budget for Sleep Tight, Inc.

Answer 1

COGS= $932,000

Step-by-step explanation:

Giving the following information:

Beginning inventory:

Finished goods= $37,000

Work in process= $30,000

Direct materials= $25,000

Ending inventory:

Finished goods= $45,000

Work in process= $35,000

Direct materials= $19,000

Direct materials purchases were $560,000

direct labor was $232,000

factory overhead was $147,000.

First, we need to calculate the cost of goods manufactured:

cost of goods manufactured= beginning WIP + direct materials used + direct labor + allocated manufacturing overhead - Ending WIP

cost of goods manufactured= 30,000 + (25,000 + 560,000 - 19,000) + 232,000 + 147,000 - 35,000

cost of goods manufactured= $940,000

Now, we can calculate the cost of goods sold:

COGS= beginning finished inventory + cost of goods manufactured - ending finished inventory

COGS= 37,000 + 940,000 - 45,000

COGS= 932,000