If we use ArtCraft Pottery as our example, which comes from the article on Budgeting - How to Develop the Operating Budget, the following information can be used to develop the cost of goods sold budget:
In order to develop the cost of goods sold budget, we have to have information from the direct materials budget, the direct labor budget, the overhead budget, and the ending finished goods inventory budget.
Using information from these budgets, we can develop the following cost of goods sold budget:
There is one footnote beside direct materials.
*Production needs = (5720 pots X $3) - (28,600 oz paint X $0.20)
ArtCraft Pottery Cost of Goods Sold Budget
|Direct Materials Used*||$22,880|
|Direct Labor Used||6,864|
|Budgeted Manufacturing Costs||$39,756|
|Beginning Finished Goods||1,251|
|Goods Available for Sale||$441,007|
|Less: Ending Finished Goods||(1,390)|
|Budgeted Cost of Goods Sold||$39,617|