WalCo is a manufacturing company. Assume the estimated inventories on January 1, 2020, for finished goods, work in process, and materials were $171,000, $63,000 and $72,000 respectively. Also assume the desired inventories on December 31, 2020, for finished goods, work in process, and materials were $216,000, $84,000 and $93,000 respectively. Direct material purchases were $467,000. Direct labor was $362,000 for the year. Factory overhead was $213,000. Prepare a cost of goods sold budget for WalCo ...

Cost of goods sold=$955000

Explanation:

we know that to calculate cost of goods sold we have to first finds cost of goods manufactured and to calculate cost of goods manufactured we will need total manufacturing cost.

Step#01: Total manufacturing cost=?

Total manufacturing cost = raw material used+direct labour + factory overhead

Raw material used=?

Raw material (open) = 72000

Add: Raw material purchase=467000

539000

less: Raw material (ending) = (93000)

Raw material used 446000

Total manufacturing cost=446000+363000+213000=1021000

Step#2: Cost of goods manufactured (COGM) = ?

we know that: COGM = Total manufacturing cost + work in process (open) - work in process (end)

COGM = 1021000+63000-84000=1000,000

Step#3: Cost of goods sold (COGS) = ?

we know that : COGS = Cost of goods manufactured+finished goods (open) - finished goods (ending)

COGS = 1000000+171000-216000=955000