Preparing a Cost of Goods Sold Budget

Andrews Company manufactures a line of office chairs. Each chair takes $14 of direct materials and uses 1.9 direct labor hours at $14 per direct labor hour. The variable overhead rate is $1.20 per direct labor hour and the fixed overhead rate is $1.80 per direct labor hour. Andrews Company expects to produce 20,000 chairs next year and expects to have 730 chairs in ending inventory. There is no beginning inventory of chairs.

Direct Materials $

Direct Labor $

Variable Overhead $

Fixed Overhead $

Total Manufacturing Cost $

Less: Ending Inventory $

Cost of Goods Sold $