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 for its first four months of operations:

The budgeted selling price per unit is $65. Budgeted unit sales for June, July, August, and September are 9,300, 24,000, 26,000, and 27,000 units, respectively. All sales are on credit.

Forty percent of credit sales are collected in the month of the sale and 60% in the following month.

The ending raw materials inventory equals 20% of the following month’s raw materials production needs. Each unit of finished goods requires 4 pounds of raw materials. The raw materials cost $2.50 per pound.

Thirty percent of raw materials purchases are paid for in the month of purchase and 70% in the following month.

The direct labor wage rate is $14 per hour. Each unit of finished goods requires two direct labor-hours.

The variable selling and administrative expense per unit sold is $1.90. The fixed selling and administrative expense per month is $63,000.

If 105,200 pounds of raw materials are needed to meet production in August, how many pounds of raw materials should be purchased in July? Raw materials to be purchased pounds.

What is the estimated cost of raw materials purchases for July? cost of raw materials to be purchased.

If the cost of raw material purchases in June is $158,880, what are the estimated cash disbursements for raw materials purchases in July? Expected cash disbursements.

[The following information applies to the questions displayed below.]

Explanation / Answer

5)

6)cost of raw materials to be purchased. = 99760 * 2.5 = $ 249400

7)

cash disbursements for raw materials purchases in July = [158880*.70]+ [249400*.30]

           = 111216+74820

             = $ 186036

8)estimated accounts payable balance at the end of July = 249400[1-.30]

                  = $ 174580

Unit produced in July 24600 requirement per unit 4 Total material requirement of material 98400 Ending raw material requirement [105200*.20] 21040 less:Beginning raw material [98400*.20] (19680) Raw material to be purchased 99760

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