14) What is the estimated total selling and administrative expense for July? 15)

Question

14) What is the estimated total selling and administrative expense for July? 15) What is the estimated net operating income for July, if the company always uses and estimated predetermined plantwide overhead rate of $8 per direct labor-hour? The following information applies to the questions displayed below Morganton Compeny 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 seling price per unit is $65. Budgeted unit sales for June, July, August, and September are 8,200, 12,000, 14,000, and 15,000 units, respectively. All sales are on credit b. Forty percent of credit sales are colected in the month of the sale and 60% in the following month. c. The ending finished goods inventory equals 20% of the following month's unit sales. Each unit of finished goods requires 5 pounds of raw materials. The raw meterials cost $2.00 per pound. e. Twenty percent of raw materials purchases are paid for in the month of purchase and 80% in the following month. t. The direct lebor wage rate is $13 per hour. Each unit of finished goods requires two direct labor-hours g The variable selling and administrative expense per unit sold is $1.30. The fixed selling and administrative expense per month is $62,000. 0

Explanation / Answer

July Sales in (units) 8200 Sales Price per unit $65 Sales in $ $533,000 Cost of goods sold July Direct Material (8200 units*5 pounds*$2) 82000 Direct Labour (8200*2 hours*$13) 213200 Manufacturing overhead (8200*2 hours*$8) 131200 Estimated Cost of good Sold 426400 Ans 13 July Sales 533000 Less: Cost of Good Sold 426400 Gross margin 106600 Ans 13 Ans 14 Estimated Total Selling and administrative expenses Variable Selling & Administrative Expenses 8200 units*1.3 10660 Fixed Selling & Administrative Expenses 62000 Total 72660 Ans 14 Ans 15 Estimated Net Income for the month of July Sales $533,000 Less: Cost of Good Sold 426400 Gross margin $106,600 Less: Selling and administrative Expenses 72660 Net Operating Income $33,940

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