GIVEN: Pampered Dog Beds, Inc. makes sherpa fleece dog beds in three sizes, large, medium and small. The controller of Pampered Dog Beds, Inc. with the assistance of the production manager and sales manager gathered the following data for use in developing the operating budgets for March 2014.

A. Estimated March sales:

	Beds	Price per Bed
Large (48 inches x 32 inches):	200	$80
Medium: (36 inches x 24 inches)	340	$70
Small: (24 inches x 16 inches)	300	$60

B. Direct materials used in production:

		square feet per bed
	Cost/sq. ft.	Large	Medium	Small
Backside Material & Padding	$1.00	10.8	6.2	2.8
Sherpa Cloth	$0.90	14.6	8.8	4.0

The padding is already attached to the backside material when it is received from the supplier.

C. Direct labor used in production: (hours per bed)

		hours per bed
	$/Labor Hour	Large	Medium	Small
Cutting Department:	$12.00	0.7	0.65	0.6
Sewing Department:	$13.50	1.0	0.9	0.8

D. Estimated March 1st and March 31st inventories:

	March 1st			March 31st
Direct Materials (First-in, First-out)	Amount	Unit cost		Amount
Backside & Padding in square feet	250	$0.96		280
Sherpa Cloth in square feet	320	$0.87		300
Work in Process	$580			$500
Finished Units (First-in, First-out)
Large	20	$58.00		22
Medium	34	$46.00		36
Small	30	$35.00		25

E. Manufacturing overhead is allocated to beds as follows:

Variable overhead	$5.00	per direct labor hour
Fixed overhead	$4.20	per unit

Part 2: Prepare a cost of goods sold budget for March.