Wilmington Chemical Company uses oil to produce two types of plastic products, P

Question

Wilmington Chemical Company uses oil to produce two types of plastic products, P1 and P2. Wilmington budgeted 50,000 barrels of oil for purchase in June for $50 per barrel. Direct labor budgeted in the chemical process was $300,000 for June. Factory overhead was budgeted $500,000 during June. The inventories on June 1 were estimated to be:

The desired inventories on June 30 were:

Use the preceding information to prepare a cost of goods sold budget for June.

Explanation / Answer

Finished goods inventory, June 1 48300 Work in Process inventory, June 1 3400 Direct materials: Direct materials inventory June 1 15500 Direct materials purchased 2500000 Cost of direct materials available for use 2515500 Less: Direct materials inventory June 30 16100 Cost of direct materials placed in production 2499400 Direct labor 300000 factory overhead 500000 Total manufacturing costs 3299400 Total work in process 3302800 Less: Work in Prcoess inventory, June 30 4000 Cost of goods manufactured 3298800 Cost of goods available for sale 3347100 Less: Finished goods inventory, June 30 53500 Cost of goods sold 3293600

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