Cost of Goods Sold Budget The cost of goods sold budget integrates the direct materials purchases budget, direct labor cost budget, and factory overhead cost budget. Estimated and desired inventories for direct materials, work in process, and finished goods must also be integrated into the cost of goods sold budget. Complete the preparation of the cost of goods sold budget for LearnCo, using information that follows provided by the controller, and using the previous budgets you have prepared. LearnCo Cost of Goods Sold Budget For the Year Ending December 31, 2012 Finished goods inventory, January 1, 20Y2 Work in process inventory, January 1, 20Y2 $9,870 $2,010 Direct materials: Direct materials inventory, January 1, 2042 $1,600 Direct materials purchases 72,888 X 74,488 X Cost of direct materials available for use Direct materials inventory, December 31, 20Y2 Cost of direct materials placed in production (1,440) s Direct labor Factory overhead Total manufacturing costs Total work in process during period (1,250) Work in process inventory, December 31, 20Y2 Cost of goods manufactured Cost of finished goods available for sale Finished goods inventory, December 31, 20Y2 (1,500) Cost of goods sold Feedback Check My Work Review the format and the flow of the cost of goods sold budget. In particular, note amounts that come from prior budgets that have been prepared. Selling/Admin. Expenses Budget The sales budget is often used as the starting point for the selling and administrative expenses budget. For example, a budgeted increase in sales may require more advertising expenses. LearnCo has prepared its selling and administrative expenses budget as follows. This budget is merely reviewed by you for use on the budgeted income statement. LearnCo Selling and Administrative Expenses Budget For the Year Ending December 31, 2012 Selling expenses Sales salaries expense $45,000 Advertising expense 15,000 Travel expense 5,400 Total selling expenses $65,400 Administrative expenses: Officers' salaries expense $85,000 Office salaries expense 35,000 Office rent expense 26,000 6,400 Office supplies expense Miscellaneous administrative expenses 1,600 Total administrative expenses 154,000 Total selling and administrative expenses $219,400 Budgeted Income Statement The budgeted income statement is prepared by integrating the sales budget, cost of goods sold budget, and selling and administrative expenses budget. Additional information that may be helpful in preparing the budgeted income statement are on the following Budgeted Income Statement Data Table Review the Budgeted Income Statement Data Table, then complete the budgeted income statement that follows the table. Round the computed amount for income tax to the nearest whole dollar. Budgeted Income Statement Data Table Interest revenue for the year $2,000 Interest expense for the year $1,500 Learn Co's income tax rate 40% LearnCo Budgeted Income Statement For the Year Ending December 31, 2012 Revenue from sales Cost of goods sold Gross profit Selling and administrative expenses: Selling expenses Administrative expenses Total selling and administrative expenses Operating income Other revenue and expenses Interest revenue Interest expense Income before income tax Income tax Net income Foodback Cost of Goods Sold Budget The cost of goods sold budget integrates the direct materials purchases budget, direct labor cost budget, and factory overhead cost budget. Estimated and desired inventories for direct materials, work in process, and finished goods must also be integrated into the cost of goods sold budget. Complete the preparation of the cost of goods sold budget for LearnCo, using information that follows provided by the controller, and using the previous budgets you have prepared. LearnCo Cost of Goods Sold Budget For the Year Ending December 31, 2012 Finished goods inventory, January 1, 20Y2 Work in process inventory, January 1, 20Y2 $9,870 $2,010 Direct materials: Direct materials inventory, January 1, 2042 $1,600 Direct materials purchases 72,888 X 74,488 X Cost of direct materials available for use Direct materials inventory, December 31, 20Y2 Cost of direct materials placed in production (1,440) s Direct labor Factory overhead Total manufacturing costs Total work in process during period (1,250) Work in process inventory, December 31, 20Y2 Cost of goods manufactured Cost of finished goods available for sale Finished goods inventory, December 31, 20Y2 (1,500) Cost of goods sold Feedback Check My Work Review the format and the flow of the cost of goods sold budget. In particular, note amounts that come from prior budgets that have been prepared. Selling/Admin. Expenses Budget The sales budget is often used as the starting point for the selling and administrative expenses budget. For example, a budgeted increase in sales may require more advertising expenses. LearnCo has prepared its selling and administrative expenses budget as follows. This budget is merely reviewed by you for use on the budgeted income statement. LearnCo Selling and Administrative Expenses Budget For the Year Ending December 31, 2012 Selling expenses Sales salaries expense $45,000 Advertising expense 15,000 Travel expense 5,400 Total selling expenses $65,400 Administrative expenses: Officers' salaries expense $85,000 Office salaries expense 35,000 Office rent expense 26,000 6,400 Office supplies expense Miscellaneous administrative expenses 1,600 Total administrative expenses 154,000 Total selling and administrative expenses $219,400 Budgeted Income Statement The budgeted income statement is prepared by integrating the sales budget, cost of goods sold budget, and selling and administrative expenses budget. Additional information that may be helpful in preparing the budgeted income statement are on the following Budgeted Income Statement Data Table Review the Budgeted Income Statement Data Table, then complete the budgeted income statement that follows the table. Round the computed amount for income tax to the nearest whole dollar. Budgeted Income Statement Data Table Interest revenue for the year $2,000 Interest expense for the year $1,500 Learn Co's income tax rate 40% LearnCo Budgeted Income Statement For the Year Ending December 31, 2012 Revenue from sales Cost of goods sold Gross profit Selling and administrative expenses: Selling expenses Administrative expenses Total selling and administrative expenses Operating income Other revenue and expenses Interest revenue Interest expense Income before income tax Income tax Net income Foodback