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Anna11 [10]
3 years ago
14

Andrews Company manufactures a line of office chairs. Each chair takes $12 of direct materials and uses 1.9 direct labor hours a

t $16 per direct labor hour. The variable overhead rate is $1.20 per direct labor hour, and the fixed overhead rate is $1.30 per direct labor hour. Andrews Company expects to produce 20,000 chairs next year and expects to have 610 chairs in ending inventory. There is no beginning inventory of chairs. Prepare a cost of goods sold budget for Andrews Company.
Business
1 answer:
Andrej [43]3 years ago
5 0

Answer and Explanation:

The preparation of the cost of goods sold budget is presented below:

Direct material ($12 × 20,000 chairs) $240,000

Direct labor ($16 × 1.9 × 20,000 chairs) $608,000

Variable overhead rate ($1.20 × 1.9 × 20,000 chairs) $45,600

Fixed overhead rate ($1.30 × 1.9 × 20,000 chairs) $49,400

Cost of goods manufactured $943,000

Add: opening inventory $0

Less: ending inventory (610 chairs × ($12 + ($16 × 1.9) + ($1.20 × 1.9) + ($1.30 × 1.9) -$41,278.70

Cost of goods sold $901,721.3

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