ABC co. with $10,000,000 of par stock outstanding, plans to budget earnings of 6%, before income tax, on this stock.

The Marketing Department budgets sales at $6,000,000.

The budget director approves the sales budget and expenses as follows:

Marketing ................................................. 15% of sales

Administrative........................................... 5%

Financial......................................................1%

Labor is expected to be 50% of the total manufacturing cost; materials issued for the budgeted production will cost $1,250,000; therefore, any savings in manufacturing cost will have to be in factory overhead.

Inventories are to be as follows:

Beginning of the Year End of the Year

Finished goods....................................... $400,000 $500,000

Work in Process...................................... 50,000 150,000

Materials................................... 250,000 200,000

Required:

The projected cost of goods sold statement, showing the budgeted purchases of materials and the adjustments for inventories of materials, work in process, and finished goods.