[The following information applies to the questions displayed below] Morganton C

Question

[The following information applies to the questions displayed below] Morganton Company makes one product and It provided the following information to help prepare the master budget for Its first four months of operations: a. The budgeted selling price per unit is $70. Budgeted unit sales for June, July, August, and September are 9700, 28,000, 30,000, and 31,000 units, respectively. All sales are on credit b. Forty percent of credit sales are collected in the month 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 month's raw materials production needs. of the sale and 60% in the following month h unit of 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 t. The direct labor wege rate is $15 per hour. Each unit of finished goods requires two direct labor-hours. 9 The vartable selling and administrative expense per unt sold is $170. The fixed selling and administrative expense per month is $67,000.

Explanation / Answer

1. Number of Units produced in July

Number of Units produced in July = Sales in July + Closing Stock - Opening Stock

Number of Units produced in July = 28000 + 30000 * 0.2 - 28000* 0.2

Number of Units produced in July = 28400 Units

2. Number of Pounds of RM purchased in july

Number of Pounds of RM purchased in July = Closing Stock + Current Month requirement - Opening Stock

Number of Pounds of RM purchased in July = 120800* 0.10 + 28400 * 4 - 28400*4*0.10

Number of Pounds of RM purchased in July = 114320 Pounds

3. Estimated cost of RM Purchases in july

Estimated cost of RM Purchases in july = Pounds of RM purchased * $2.50 /Pound

Estimated cost of RM Purchases in july = 114320 * $2.50 /Pound

Estimated cost of RM Purchases in july = $285800

4. Estimated cash disbursemtnts for RM in july

Estimated cash disbursemtnts for RM in july = 70% of June of Purchases + 30% of July purchases

Estimated cash disbursemtnts for RM in july = 70% * $148640 + 30% * $285800

Estimated cash disbursemtnts for RM in july = 70% * $148640 + 30% * $189788

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