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 four months of operations:

The budgeted selling price per unit is $60. Budgeted unit sales for June, July, August, and September are 8,600, 17,000, 19,000, and 20,000 units, respectively. All sales are on credit.

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 $2.40 per pound.

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 $1.80. The fixed selling and administrative expense per month is $67,000.

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

Explanation / Answer

Calculations of the Cost of Raw Material June July August September Sales 8600 17000 19000 20000 Selling Price 60 60 60 60 Total Sales 516000 1020000 1140000 1200000 Cash Collected 154800 306000 342000 360000 Next Month 361200 714000 798000 Total Collections of sales 667200 1056000 1158000 Finished Goods Inventory 4250 4750 5000 0 Opening 4250 4750 5000 Production- Finished goods 12850 17500 19250 15000 Raw Material 87500 96250 Ending Inventory 8750 9625 Opening -8750 Purchases 88375 Cost of purchases 212100 88375*2.40 The estimated cost of raw material purchases for july is $ 212100

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