Morganton Company makes one product and it provided the following information to

Question

Morganton Company makes one product and it provided the following information to help prepare the master budget a. The budgeted selling price per unit is $60. Budgeted unit sales for June, July, August, and September are 9,800,29,0 00, 31,000, and 32,000 units, respectively. All sales are on credit. b. Thirty percent of credit sales are collected int month of the sale and 70% in the follow ng month. c The ending finished goods inventory equals 20% ofthe following month's unit sales d. The endin g raw mater as inventory equals 10% of the following months raw materials production needs. Each unit of finished e. Thirty percent of raw materials purchases are paid for in the month of purchase and 70% n the following month. f. The direct labor wage rate is $15 per hour. Each unit of finished goods requires two direct labor-hours. g. The variable selling and administrative expense per unit sold is $1.80. The fixed selling and administrative expense p goods requires 4 pounds of raw materials. The raw materials cost $2.50 per pound. er month is $68,000. 7 In July what are the total estimated cash disbursements for raw materials purchases? Assume the cost of raw material purchases in June is $152,160. rsements

Explanation / Answer

Production in july = 29000+(31000*20%)-(29000*20%) = 29400 Units

Production in august = 31000+(32000*20%)-(31000*20%) = 31200 Units

Raw material purchase in july = (29400*4)+(31200*4*10%)-(29400*4*10%) = 118320 pounds

Raw material purchase inn july = 118320*2.5 = 295800

Cash disbursement for july = (295800*30%+152160*70%) = $195252

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