Preparing a cost of goods sold budget

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Reference no: EM13966028

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

		Direct Materials
Product	Casing Material	Wood	Plastic Mellets	Total
Amount required for production:
Guns	1,030,250	232,300	22,120
Swords	1,141,500	1,131,720	10,100
Plus desired inventory, Dec. 31,2015	100,900	20,250	12,100
Total	2,272,650	1,384,270	44,320
Less estimated inventory, Jan.1,2015	96,950	14,150	8,680
Total amount to be purchased	2,175,700	1,370,120	35,640
Unit price	x $2.25	x $1.05	x $1.30
Total direct materials to be purchased	$4,895,325	$1,438,626	$46,332	$6,380,283

Direct Labor Cost Budget

Heritage Products Direct labor Cost Budget fro the year ending dec. 31,2015

	Casting	Painting and Assembly	Total
Hours required for production:
Guns	32,250	36,060
Swords	34,930	40,425
Total	67,180	76,485
Hourly rate	x $10.10	x $12.80
Total direct labor cost	$678,518	$979,008	$1,657,526

Factory Overhead cost budget

Hertiage Products Factory overhead cost budget for the year ending dec. 31,2015

Indirect materials	$293,000
Production supervisors' salaries	305,200
Factory equipment depreciation	75,250
Factory insurance	9,100
Factory utilities expense	18,585
Total factory overhead costs	$701,135

Inventory Balances

		Inventory
	Direct Materials	Work in Process	Finished Goods
January 1, 2015 balance	$222,910	$351,300	$455,500
Dec. 31, 2015 balance	$241,100	$298,950	$387,840

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

Finished goods inventory, Jan. 1, 2015
Work in process inventory, Jan. 1, 2015
Direct materials:
Direct materials inventory, Jan. 1, 2015
Direct materials purchases
Cost of direct materials available for use
Less direct materials inventory, Dec. 31,2015
Cost of direct materials placed into production
Direct labor
Factory overhead
Total manufacturing costs
Total work in process during period
Less work in process inventory, Dec. 31,2015
Cost of goods manufactured
Cost of finished goods available for sale
less finished goods inventory, Dec. 31,2015
Cost of goods sold			$8,840,764

Reference no: EM13966028

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