Schedule 2 - Cost of goods manufactured Brown Boot Company Schedule of cost of goods manufactured December 31, 20X2-20X4 (20X5 budget) (in $'000s) 20X2 20X3 20X4 20X5 budget Direct materials used $ 47,239 $ 50,715 $ 46,786 $ 43,992 Direct labour 22,504 25,340 28,135 22,308 Overhead applied Variable overhead applied 7,446 $ 8,200 $ 9,100 $ 7,392 Fixed overhead applied 4,654 $ 5,125 5,688 5,620 Total manufacturing overhead costs applied $ 12,100 $ 13,325 $ 14,788 $ 13,012 Total cost of goods manufactured $ 81,843 $ 89,380 $ 89,709 $ 79,312 1 BBC uses first in, first out inventory costing and a normal costing system to apply overhead to inventory. Over- or underapplied overhead is negligible. 2 Beginning and ending work-in-process inventory is not considered because the difference between beginning and ending balances is negligible. The cost of goods sold schedule shows a buildup of product that is putting a strain on the warehouse. The operations manager has noted that word from the marketing team is that the company needs to produce to increase the bottom line and keep unit costs low