Preparing a cost of goods sold budget.
Heritage Products manufactures replicas of everyday items used during military reenactments. The company's direct materials purchases budget, direct labor cost budget, and factory overhead cost budget for 2015 have been prepared, as well as additional information related to Heritage's inventory balances.
Direct Materials Purchases Budget
Heritage Products Direct Materials Purchases Budget For the Year ending Dec. 31,2015
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Direct Materials
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Product
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Casing Material
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Wood
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Plastic Mellets
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Total
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Amount required for production:
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Guns
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1,030,250
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232,300
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22,120
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Swords
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1,141,500
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1,131,720
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10,100
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Plus desired inventory, Dec. 31,2015
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100,900
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20,250
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12,100
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Total
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2,272,650
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1,384,270
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44,320
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Less estimated inventory, Jan.1,2015
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96,950
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14,150
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8,680
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Total amount to be purchased
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2,175,700
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1,370,120
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35,640
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Unit price
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x $2.25
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x $1.05
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x $1.30
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Total direct materials to be purchased
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$4,895,325
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$1,438,626
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$46,332
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$6,380,283
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Direct Labor Cost Budget
Heritage Products Direct labor Cost Budget fro the year ending dec. 31,2015
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Casting
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Painting and Assembly
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Total
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Hours required for production:
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Guns
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32,250
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36,060
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Swords
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34,930
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40,425
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Total
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67,180
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76,485
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Hourly rate
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x $10.10
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x $12.80
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Total direct labor cost
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$678,518
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$979,008
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$1,657,526
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Factory Overhead cost budget
Hertiage Products Factory overhead cost budget for the year ending dec. 31,2015
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Indirect materials
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$293,000
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Production supervisors' salaries
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305,200
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Factory equipment depreciation
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75,250
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Factory insurance
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9,100
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Factory utilities expense
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18,585
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Total factory overhead costs
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$701,135
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Inventory Balances
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Inventory
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Direct Materials
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Work in Process
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Finished Goods
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January 1, 2015 balance
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$222,910
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$351,300
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$455,500
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Dec. 31, 2015 balance
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$241,100
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$298,950
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$387,840
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A. Complete the following cost of goods sold budget for Heritage products:
Heritage Products Cost of Goods Sold budget for the year ending dec. 31,2015
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Finished goods inventory, Jan. 1, 2015
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Work in process inventory, Jan. 1, 2015
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Direct materials:
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Direct materials inventory, Jan. 1, 2015
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Direct materials purchases
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Cost of direct materials available for use
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Less direct materials inventory, Dec. 31,2015
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Cost of direct materials placed into production
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Direct labor
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Factory overhead
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Total manufacturing costs
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Total work in process during period
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Less work in process inventory, Dec. 31,2015
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Cost of goods manufactured
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Cost of finished goods available for sale
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less finished goods inventory, Dec. 31,2015
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Cost of goods sold
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$8,840,764
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