Title: Preparing a Cost of Goods Sold Budget Andrews Company manufactures a line of office chairs. Each chair takes $14 of direct materials and uses 1.9 direct labor hours at $16 per direct labor hour. The variable overhead rate is $1.20 per direct labor hour, and the fixed overhead rate is $1.60 per direct labor hour. Andrews expects to produce 20,000 chairs next year and expects to have 675 chairs in ending inventory. There is no beginning inventory of office chairs. **Required:** Prepare a cost of goods sold budget for Andrews Company. --- **Andrews Company** **Cost of Goods Sold Budget** For the Coming Year | Description | Amount | |------------------------------|-------------------------------| | Direct materials | [Amount to be filled] | | Direct labor | $3 | | Variable overhead | $4.32 | | Total manufacturing cost | [Amount to be filled] | | Less: Variable overhead | [Amount to be filled] | | Cost of goods sold | [Amount to be filled] | **Note:** The table above is part of the budgeting process for calculating the cost of goods sold by considering direct materials, direct labor, and overhead costs required for production.
Title: Preparing a Cost of Goods Sold Budget Andrews Company manufactures a line of office chairs. Each chair takes $14 of direct materials and uses 1.9 direct labor hours at $16 per direct labor hour. The variable overhead rate is $1.20 per direct labor hour, and the fixed overhead rate is $1.60 per direct labor hour. Andrews expects to produce 20,000 chairs next year and expects to have 675 chairs in ending inventory. There is no beginning inventory of office chairs. **Required:** Prepare a cost of goods sold budget for Andrews Company. --- **Andrews Company** **Cost of Goods Sold Budget** For the Coming Year | Description | Amount | |------------------------------|-------------------------------| | Direct materials | [Amount to be filled] | | Direct labor | $3 | | Variable overhead | $4.32 | | Total manufacturing cost | [Amount to be filled] | | Less: Variable overhead | [Amount to be filled] | | Cost of goods sold | [Amount to be filled] | **Note:** The table above is part of the budgeting process for calculating the cost of goods sold by considering direct materials, direct labor, and overhead costs required for production.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
![Title: Preparing a Cost of Goods Sold Budget
Andrews Company manufactures a line of office chairs. Each chair takes $14 of direct materials and uses 1.9 direct labor hours at $16 per direct labor hour. The variable overhead rate is $1.20 per direct labor hour, and the fixed overhead rate is $1.60 per direct labor hour. Andrews expects to produce 20,000 chairs next year and expects to have 675 chairs in ending inventory. There is no beginning inventory of office chairs.
**Required:**
Prepare a cost of goods sold budget for Andrews Company.
---
**Andrews Company**
**Cost of Goods Sold Budget**
For the Coming Year
| Description | Amount |
|------------------------------|-------------------------------|
| Direct materials | [Amount to be filled] |
| Direct labor | $3 |
| Variable overhead | $4.32 |
| Total manufacturing cost | [Amount to be filled] |
| Less: Variable overhead | [Amount to be filled] |
| Cost of goods sold | [Amount to be filled] |
**Note:** The table above is part of the budgeting process for calculating the cost of goods sold by considering direct materials, direct labor, and overhead costs required for production.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F480de48a-3426-4c6d-9fa5-f5f0a0d1d22b%2F5f0d1983-d1e3-4c78-88e2-e8ba841ad364%2Fpge0zop.jpeg&w=3840&q=75)
Transcribed Image Text:Title: Preparing a Cost of Goods Sold Budget
Andrews Company manufactures a line of office chairs. Each chair takes $14 of direct materials and uses 1.9 direct labor hours at $16 per direct labor hour. The variable overhead rate is $1.20 per direct labor hour, and the fixed overhead rate is $1.60 per direct labor hour. Andrews expects to produce 20,000 chairs next year and expects to have 675 chairs in ending inventory. There is no beginning inventory of office chairs.
**Required:**
Prepare a cost of goods sold budget for Andrews Company.
---
**Andrews Company**
**Cost of Goods Sold Budget**
For the Coming Year
| Description | Amount |
|------------------------------|-------------------------------|
| Direct materials | [Amount to be filled] |
| Direct labor | $3 |
| Variable overhead | $4.32 |
| Total manufacturing cost | [Amount to be filled] |
| Less: Variable overhead | [Amount to be filled] |
| Cost of goods sold | [Amount to be filled] |
**Note:** The table above is part of the budgeting process for calculating the cost of goods sold by considering direct materials, direct labor, and overhead costs required for production.
Expert Solution
Working Note:
Ending Inventory = Total manufacturing cost x No. of ending units / No. of units produced
= $1,216,000 x 675/20,000
= $41,040
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