Sleep Tight manufactures comforters. The estimated inventories on January 1 for

Question

Sleep Tight manufactures comforters. The estimated inventories on January 1 for finished goods, work in process, and materials were $37,000, $31,000 and $29,000 respectively. The desired inventories on December 31 for finished goods, work in process, and materials were $43,000, $33,000 and $23,000 respectively. Direct material purchases were $560,000. Direct labor was $243,000 for the year. Factory overhead was $148,000.

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

Sleep Tight Inc Cost of goods sold budget For the year ended December 31, Less: Cost of goods sold Finished goods inventory, January 1 $    37,000 Work in process inventory, January 1 $    31,000 Direct Meterial Direct material, January 1 $    29,000 Add: Purchase of raw meterial $ 560,000 Raw meterials available for production $ 589,000 Less: Ending raw meterial inventory $    23,000 Raw meterials transferred to production $ 566,000 Direct Labour $ 243,000 Factory overhead $ 148,000 Total manufacturing cost $ 957,000 Less: Ending work in progress inventory $    33,000 Cost of goods manufactured $ 955,000 Cost of finished goods available for sale $ 992,000 Less: Ending finished goods inventory $    43,000 Cost of goods sold $ 949,000

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