The preparation of the Cost of Goods Sold Budget for MingWare Ceramics Inc. in September is as follows:
<h3>Cost of Goods Sold Budget: </h3>
Beginning inventory of finished goods $11,850
Cost of goods manufactured 485,310
Ending inventory of finished goods (12,670)
Cost of Goods Sold $484,490
<h3>What is the cost of goods sold budget?</h3>
The cost of goods sold budget sums the costs of the beginning inventory of finished goods with the cost of goods manufactured and subtracts the ending inventory of finished goods.
The cost of goods sold budget is based on the cost of goods manufactured budget.
<h3>Data and Calculations:</h3>
Direct materials: Enamel Paint Porcelain Total
Total direct materials purchases
budgeted for September $35,870 $7,530 $139,890 $183,290
Estimated inventory, September 1 1,730 4,150 6,920 12,800 Desired inventory, September 30 (2,980) (2,710) (7,150) (12,840)
Materials used in production $183,250
Direct labor cost: Kiln Department Decorating Department Total
Total direct labor cost
budgeted for September $51,550 $149,500 $201,050
Finished goods inventories: Dish Bowl Figurine Total
Estimated inventory, September 1 $5,810 $3,310 $2,730 $11,850
Desired inventory, September 30 3,720 4,590 4,360 12,670
<h3>Cost of goods manufactured budget: </h3>
Work in process inventories:
Estimated inventory, September 1 $3,540
Direct materials used in production $183,250
Direct labor costs $201,050
Total factory overhead costs $99,450
Desired inventory, September 30 (1,980)
Cost of goods manufactured $485,310
<h3>Budgeted factory overhead costs for September: </h3>
Indirect factory wages $80,400
Depreciation of plant and equipment 10,550
Power and light 5,110
Indirect materials 3,390
Total 99,450
Thus, to prepare the cost of goods sold, as above, MingWare Ceramics, requires to determine the cost of goods manufactured for September.
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