Problem:
1. Dover Chemical Company uses oil to produce two types of plastic products, P1 and P2. Dover budgeted 30,000 barrels of oil for purchase in June for $28 per barrel. Direct labor budgeted in the chemical process was $150,000 for June. Factory overhead was budgeted
$275,000 during June. The inventories on June 1 were estimated to be:
Oil . . . . . . . . . . . . . . . . . . . . . . . . $15,300
P1 . . . . . . . . . . . . . . . . . . . . . . . . . . 8,700
P2 . . . . . . . . . . . . . . . . . . . . . . . . . . 9,200
Work in process . . . . . . . . . . . . . . 11,800
The desired inventories on June 30 were:
Oil . . . . . . . . . . . . . . . . . . . . . . . . $12,200
P1 . . . . . . . . . . . . . . . . . . . . . . . . . . 8,300
P2 . . . . . . . . . . . . . . . . . . . . . . . . . . 9,500
Work in process . . . . . . . . . . . . . . 10,700
Use the preceding information to prepare a cost of goods sold budget for June.