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 $70. Budgeted unit sales for June, July, August, and September are 8,500, 16,000, 18,000, and 19,000 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 10% of the following month’s raw materials production needs. Each unit of finished goods requires 5 pounds of raw materials. The raw materials cost $2.00 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 $13 per hour. Each unit of finished goods requires two direct labor-hours.

The variable selling and administrative expense per unit sold is $1.70. The fixed selling and administrative expense per month is $66,000.

If the company always uses an estimated predetermined plantwide overhead rate of $8 per direct labor-hour, what is the estimated unit product cost? (Round your answer to 2 decimal places.)

What is the estimated finished goods inventory balance at the end of July, if the company always uses an estimated predetermined plantwide overhead rate of $8 per direct labor-hour?

What is the estimated cost of goods sold and gross margin for July, if the company always uses an estimated predetermined plantwide overhead rate of $8 per direct labor-hour?

What is the estimated total selling and administrative expense for July?

What is the estimated net operating income for July, if the company always uses an estimated predetermined plantwide overhead rate of $8 per direct labor-hour?

Morganton Company makes one product and it provided the following information to help prepare the master budget for its first four months of operations:

Explanation / Answer

Morganton Company Budget Details June   July August September Budgeted Unit Sales               8,500          16,000          18,000        19,000 Required Ending FG inventory             3,200            3,600            3,800                 -   Less Opening Balance of FG inventory            3,200            3,600          3,800 Required Production of FG in Units          16,400          18,200 Standard cost of FG   Details Amt $ Raw Materials per unit FG @5 lb @$2/lb             10.00 Direct Labor cost @2 DLH /unit FG @$13/Hr=             26.00 Predetermined Overhead Applied @$8/DLH for 2 labor Hrs per unit=             16.00      11 Estimated Unit cost of Production=             52.00      12 Estimated FG inventory Balance in Jul end unit       3,600.00 Estimated Unit cost of Production=             52.00 Ending Inventory Value Jul end=        187,200      13 Details Amt $/Unit Required Production of FG in Units          16,400 Estimated Unit cost of Production=             52.00 Cost Of Goods Sold for Jul        852,800 Budgeted Unit Sales Jul=          16,000 Sales Revenue @$70/unit    1,120,000 Less :Cost Of Goods Sold for Jul        852,800 Gross Margin Jul=        267,200      14 Total Variable selling & Admin cost for Jul @$1.7 for 16000 units          27,200 Total Fixed selling & Admin cost for Jul=          66,000 Total Selling & Admin Cost for July          93,200      15 Gross Margin Jul=        267,200 Less : Selling & Admin Expense Jul          93,200 Net Operating Income Jul=        174,000

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