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

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[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 Forty percent 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 credit sales are collected in the month 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 wage rate is $15 per hour. Each unit of finished goods requires two direct labor-hours. 9 The vartable selling and administrative expense per unit sold is $170. The fixed selling and administrative expense per month is $67,000

Explanation / Answer

June July August September D Unit sales                     9,700          28,000          30,000          31,000 E Ending Finished goods inventory 5600 6000 6200 F Beginning Finished goods inventory 0 5600 6000 6200 G=D+E-F Units Manufactured                  15,300          28,400          30,200 Cost per unit: Raw material $10 (4*2.5) Direct labor $30 (2*15) Manufactring overhead $20 (2*10) Unit cost $60 Finished goods inventory balance at end of July $360,000 (6000*60) A Estimated cost of goods sold in July $        1,680,000 (28000*60) B Sales Revenue in July $        1,960,000 (28000*70) C=B-A Gross Margin in July $            280,000 Units Sold in July                  28,000 H Estimated Variable Selling & Admin expenses in July $              47,600 (28000*1.7) I Estimated Fixed Selling & Admin expenses in July $67,000 J=H+I Estimated Selling and Admin Expenses in July $            114,600 K Gross Margin in July $            280,000 L Selling andAdmin expenses in July $            114,600 M=K-L Net Operating Income in July $            165,400

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