Delaware Chemical Company uses oil to produce two types of plastic products, P1 and P2. Delaware budgeted 20,500 barrels of oil for purchase in June for $62 per barrel. Direct labor budgeted in the chemical process was $165,200 for June. Factory overhead was budgeted at $228,800 during June. The inventories on June 1 were estimated to be: Oil $11,600 P1 7,800 P2 6,600 Work in process 9,600 The desired inventories on June 30 were: Oil $12,700 P1 7,100 P2 6,300 Work in process 9,900 Use the preceding information to prepare a cost of goods sold budget for June. For those boxes in which you must enter subtracted or negative numbers use a minus sign. Delaware Chemical Company Cost of Goods Sold Budget For the Month Ending June 30 Finished goods inventory, June 1 $ Work in process inventory, June 1 $ Direct materials: Direct materials inventory, June 1 $ Direct materials purchases Cost of direct materials available for use $ Direct materials inventory, June 30 Cost of direct materials placed in production $ Direct labor Factory overhead Total manufacturing costs Total work in process during the period $ Work in process inventory, June 30 Cost of goods manufactured Cost of finished goods available for sale $ Finished goods inventory, June 30 $ Cost of goods sold $
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
Cost of Goods Sold Budget
Delaware Chemical Company uses oil to produce two types of plastic products, P1 and P2. Delaware budgeted 20,500 barrels of oil for purchase in June for $62 per barrel. Direct labor budgeted in the chemical process was $165,200 for June. Factory
| Oil | $11,600 |
| P1 | 7,800 |
| P2 | 6,600 |
| Work in process | 9,600 |
The desired inventories on June 30 were:
| Oil | $12,700 |
| P1 | 7,100 |
| P2 | 6,300 |
| Work in process | 9,900 |
Use the preceding information to prepare a cost of goods sold budget for June. For those boxes in which you must enter subtracted or negative numbers use a minus sign.
| Delaware Chemical Company | |||
| Cost of Goods Sold Budget | |||
| For the Month Ending June 30 | |||
| Finished goods inventory, June 1 | $ | ||
| Work in process inventory, June 1 | $ | ||
| Direct materials: | |||
| Direct materials inventory, June 1 | $ | ||
| Direct materials purchases | |||
| Cost of direct materials available for use | $ | ||
| Direct materials inventory, June 30 | |||
| Cost of direct materials placed in production | $ | ||
| Direct labor | |||
| Factory overhead | |||
| Total |
|||
| Total work in process during the period | $ | ||
| Work in process inventory, June 30 | |||
| Cost of goods manufactured | |||
| Cost of finished goods available for sale | $ | ||
| Finished goods inventory, June 30 | $ | ||
| Cost of goods sold | $ |
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