Budgeting Basics and Beyond

6.9. Ending Finished Goods Inventory Budget

The ending finished goods inventory budget provides us with the information required for the construction of budgeted financial statements. After completing Schedules 1 to 5, sufficient data will have been generated to compute the per-unit manufacturing cost of finished product. This computation is required for two reasons: (1) to help compute the cost of goods sold on the budgeted income statement, and (2) to give the dollar value of the ending finished goods inventory to appear on the budgeted balance sheet.

Schedule 6

Table 6.6. THE PUTNAM COMPANY Ending Inventory Budget For the Year Ended December 31, 20B Ending Inventory

Units	Unit Product Cost	Total
300 units (Sch.2)	$82[]	$24,600
[]

^[] The unit product cost of $82 is computed as follows:

	Unit Cost	Units	Total
Direct materials	$5 per lbs.	2 pounds	$10
Direct labor	10 per hr.	5 hours	50
Factory overhead[]	4.40 per hr.	5 hours	22
Unit product cost			$82
[]

^[] Predetermined factory overhead applied rate = budgeted annual factory overhead/budgeted annual activity units = $134,200/30,500 DLH = $4.40.