budget he plaill availability of a complex milling machine, t one quarter. Is th
ID: 2513916 • Letter: B
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budget he plaill availability of a complex milling machine, t one quarter. Is thi e. After seeing this revised budgel s a potential problem? If so, what can be done about 15 connect Available with McGraw-Hill's Connect Accounting. it provided the following information to help prepare Morganton Company makes one product and master budget for its first four months of operations: are 8.400, 10,000, 12,000, and 13,000 units, respectively. All sales are on credit. orty percent of credit sales are collected in the month of the sale and 60% in the followin a. The budgeted selling price per unit is $70. Budgeted unit sales for June, July. August, and ending finished goods inventory equals 20% of the following month's unit sales. e ending raw materials inventory equals 10% of the following month's raw material s production cost needs. Each unit of finished goods requires 5 pounds of raw materials. The raw materials e. Thirty percent of raw materials purchases are paid for in the month of purchase and 70% int f. The direct labor wage rate is $15 per hour. Each unit of finished goods requires two direct laborshoun d. Th pound. following month. g. The variable selling and administrative expense per unit sold is $1.80. The fixed selling and administrative expense per month is $60,000. Required: 1. What are the budgeted sales for July? 2. What are the expected cash collections for July? 3. What is the accounts receivable balance at the end of July? 4. According to the production budget, how many units should be produced in July? 5. If 61,000 pounds of raw materials are needed to meet production in August, how many pounds of raw materials should be purchased in July? 6. What is the estimated cost of raw materials purchases for July? 7. If the cost of raw material purchases in June is $88,880, what are the estimated cash disbursements tor raw materials purchases in July? 8. What is the estimated accounts payable balance at the end of July? 9. What is the estimated raw materials inventory balance at the end of July? 10. What is the total estimated direct labor cost for July assuming the direct labor workforce is ad match the hours required to produce the forecasted number of units produced? 11. If the company always uses an estimated predetermined plantwide overhead rate of S10 per adjustedw labor-hour, what is the estimated unit product cost? 12. What is the estimated finished goods inventory balance at the end of July? 13. What is the estimated cost of goods sold and gross margin for July? 14. What is the estimated total selling and administrative expense for July? 15. What is the estimated net operating income for July? Connect ACCOUNTING All applicable exercises are available with McGraw-Hill's Connect Accounting. EXERCISE 7-1 Schedule of Expected C ilver ComnanuExplanation / Answer
Answer to Part 1:
Budgeted Sales for July = Budgeted Unit Sales * Selling Price per Unit
Budgeted Sales for July = 10,000 * $70
Budgeted Sales for July = $700,000
Answer to Part 2:
Expected Cash Collections for July = (60% of June Sales) + (40% of July sales)
June Sales = 8,400 * $70 = $588,000
Expected Cash Collections for July = (60% of $588,000) + (40% of $700,000)
Expected Cash Collections for July = $352,800 + $280,000
Expected Cash Collections for July = $632,800
Answer to Part 3:
Accounts Receivable at the end of July = 60% of July Sales
Accounts Receivable at the end of July = 60% of $700,000
Accounts Receivable at the end of July = $420,000
Answer to Part 4:
Units to be Produced in July = Budgeted Unit Sales of July + Desired Ending Inventory – Beginning Inventory
Desired Ending Inventory = 12,000 * 20% = 2,400 Units
Beginning Inventory = 10,000 * 20% = 2,000 Units
Units to be Produced in July = 10,000 + $2,400 - $2,000
Units to be Produced in July = 10,400 Units
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