Morganton Company makes one product and it provided the following information to
ID: 2342424 • Letter: M
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 4 0031,000.and auz oo0units, ospecively Aul dales arn tsale for lune, July. August, and September are 3,800, 29.0 sa b. Th C. The ending finished goods inventory equals 20% of the following month's unit sales d. The ending raw materials inventory equals 10% of the following months raw materials production needs. Each unit of irty percent of credit sales are collected in the month of the sale and 70% in the following month. finished goods requires 4 pounds of raw materials. The raw materials cost $2.50 per pound e. Thirty percent of raw materials purchases are paid for in the month of purchase and 70% in 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 er month is $68,000 9. What is the estimated raw materials inventory balance at the end of July? Raw material inventory balanceExplanation / Answer
Production Budget
(Partial for June and September ) Complete for July and August
June
July
August
September
Sales Units
9800
29000
31000
32000
Ending Inventory
5800
6200
6400
0
Finished units needed
15600
35200
37400
32000
Less: Beginning Finished inventory
0
5800
6200
6400
Units to be Produced
15600
29400
31200
25600
Raw material Budget (Partial for June and September ) Complete for July and August
June
July
August
September
Units to be produced
15600
29400
31200
25600
Raw material needed Per unit of Production
4
4
4
4
Raw material needed for Production requirements
62400
117600
124800
102400
Add: Desired Ending Raw material inventory
11760*
12480
10240
0
Raw Material needed
74160
130080
135040
102400
Less: Beginning inventory
11760
12480
10240
Raw material to be purchased
74160
141840
147520
112640
*117600x10%
Ending raw material inventory for July = 12480 units
Production Budget
(Partial for June and September ) Complete for July and August
June
July
August
September
Sales Units
9800
29000
31000
32000
Ending Inventory
5800
6200
6400
0
Finished units needed
15600
35200
37400
32000
Less: Beginning Finished inventory
0
5800
6200
6400
Units to be Produced
15600
29400
31200
25600
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