The Cost of Goods Sold Budget

Using the direct material usage budget, direct material purchase budget, direct material labor costs budget, manufacturing overhead budget  and ending inventory budget, prepare a cost of goods sold budget. The process to compute this cost is as follows:

Direct materials used  + Direct manufacturing labor + Manufacturing overhead costs = cost of goods manufactured

Beginning finished goods inventory + cost of goods manufactured = cost of goods available for sale

Cost of goods available for sale – ending finished goods inventory = cost of goods sold.

 

Next: Preparing the  Non-manufacturing Costs Budget.

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