5:19 PM * 36% v2.cengagenow.com Cost of goods sold budget Pasadena Candle Inc. b

Question

5:19 PM * 36% v2.cengagenow.com Cost of goods sold budget Pasadena Candle Inc. budgeted Assume that six minutes are required to mold each candle. If molding labor costs $18 per hour, determine the direct labor cost budget for the year. Wax is required to produce a candle. Assume 487,125 pounds of material will be purchased during the year. If candle wax costs $1.24 per pound, determine the direct materials purchases for the year production of 785,000 candles for the year. Each candle requires molding 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 December 31 for finished goods and work in process were $120,000 and $28,500, respectively and direct materials wax inventory of 12,500 in which you must enter subtracted or negative numbers use a minus si wax inventory of 16,000 pounds. Also assume the desired inventories on pounds. Factory overhead was budgeted at $300,000. For those boxes gn Pasadena Candle Inc. Cost of Goods Sold Budget For the Year Ending December 3 Direct materials Check My Work 2more Chack My Work uses remaning 2 more Check My Work uses remaning Previous Next Email Instructor Save and Exit Submit t for Grading

Explanation / Answer

Pasadena candle Inc

COST OF GOODS SOLD BUDGET

For the year ended december 31

Direct material cost(working note 1) = 608375

Direct Labour cost (working note 2) = 1413000

Factory overhead ( Given) = 300000

Total 2321375

+Opening stock of finished goods = 200000

+Opening stock of WIP = 41250

Total 2562625

-Closing  stock of finished goods = ( 120000)

-Closing stock of WIP = ( 28250)

Cost Of Goods Sold 2414375

WORKING NOTES

1) Direct material cost= Raw material consumed *Cost per unit

=(Opening stock of raw material+purchases+closing stock of raw material)*1.24

=(16000+487125-12500)*1.24

=490625*1.24

=608375

2)Direct Labour cost

Total budgeted production=785000 candles

Time required to produce one candle=6 min

Time required to produce 785000 candles=785000*6

=4710000 min.

= 4710000/60=78500 hours

Labour cost per hour =18

since, total labour cost =78500*18

=1413000

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