Cost of Goods Sold Budget

Play-Disc makes Frisbee-type plastic discs. Each 12-inch diameter plastic disc has the following manufacturing costs:

Direct materials	$1.75
Direct labor	0.45
Variable overhead	0.80
Fixed overhead	1.85
Total unit cost	$4.85

For the coming year, Play-Disc expects to make 300,000 plastic discs, and to sell 288,000 of them. Budgeted beginning inventory in units is 18,000 with unit cost of $4.85. (There are no beginning or ending inventories of work in process.)

Required:

1. Calculate the total budgeted cost of units produced for Play-Disc for the coming year. Show the cost of direct materials, direct labor, and overhead.

Budgeted direct materials	$
Budgeted direct labor
Budgeted overhead
Total budgeted manufacturing cost	$

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2. Prepare a cost of goods sold budget for Play-Disc for the year.

Play-Disc
Cost of Goods Sold Budget
For the Year
< >Beginning inventoryCost of goods soldDirect materialsEnding inventoryFinished goods	$
< >Beginning inventoryCost of goods soldDirect laborEnding inventoryFinished goods
< >Beginning inventory, finished goodsCost of goods finishedCost of goods soldEnding inventory, finished goodsOverhead
Total manufacturing cost	$
< >Add: Beginning inventory, finished goodsAdd: Cost of goods manufacturedAdd: Cost of goods soldLess: Beginning inventory, finished goods
< >Add: Cost of goods manufacturedLess: Beginning inventory, finished goodsLess: Cost of goods soldLess: Ending inventory, finished goods
Cost of goods sold	$

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3. What if the beginning inventory of finished goods was $86,500 (for 18,000 units)? How would that affect the cost of goods sold budget? (Assume Play-Disc uses the FIFO method.) The cost of goods sold would

increase

decrease

to $.