21 QUIZ Sleep Tight manufactures comforters. The estimated inventories on Januar

Question

21 QUIZ Sleep Tight manufactures comforters. The estimated inventories on January 1 for finished goods, work in process, and materials were $36,000, $32,000 and $29,000 respectively. The desired inventories on December 31 for finished goods, work in process, and materials were $43,000, $36,000 and $20,000 respectively. Direct material purchases were $550,000. Direct labor was $249,000 for the year. Factory overhead was $160,000. Prepare a cost of goods sold budget for Sleep Tight, Inc. Sleep Tight, Inc. Cost of Goods Sold Budget For the Year Ending December 31 Finished goods inventory, January 1 Work in process inventory, January 1 Direct materials: Direct materials, January 1 Direct materials purchases Cost of direct materials available for sale Less direct materials inventory, December 31 Cost of direct materials placed in production Direct labor Factory overhead Total manufacturing costs Total work in process during the period Less work in process inventory, December 31 Cost of goods manufactured Cost of finished goods available for sale Less finished goods inventory, December 31 Cost of goods sold

Explanation / Answer

Schedule of cost of goods sold

Finished goods inventory, january 1 36000 Work in process inventory, january 1 32000 Direct materials Direct materials january 1 29000 Direct material purchase 550000 Cost of direct material available for use 579000 Less: Direct materials inventory, december 31 (20000) Cost of direct materials placed in production 559000 Direct labour 249000 Factory overhead 160000 Total manufacturing costs 968000 Total work in process during the period 1000000 Less: WOrk in process inventory, december 31 (36000) Cost of goods manufactured 964000 Cost of finished goods available for sale 1000000 Less: Finished goods inventory, december 31 (43000) Cost of goods sold 957000

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