Preparing a Cost of Goods Sold Budget

Andrews Company manufactures a line of office chairs. Each chair takes $16 of direct materials and uses 1.9 direct labor hours at $20 per direct labor hour. The variable overhead rate is $1.20 per direct labor hour, and the fixed overhead rate is $1.70 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.

Required:

What is cost of goods sold budget for Andrews Company? Round your answers to the nearest dollar. I am stuck on how to calculate direct labor and variable overhead.

Andrews Company

Cost of Goods Sold Budget

For the Coming Year

Direct materials $320,000

Direct labor

Variable overhead

Fixed overhead

Total manufacturing cost

$

Less: Ending inventory

Cost of goods sold

$