Help Save&Exitu; ework Check my wo Required information The following informatio

Question

Help Save&Exitu; ework Check my wo Required information The following information applies to the questions displayed below Morganton Company makes one product and it provided the following information to help prepare the master budget a. The budgeted selling price per unit is $70, Budgeted unit sales for June, July, August, and September are 8,400 10,000, 12000, and 13,000 units, respectively. All sales are on credt c. The ending finished goods inventory equals 20% of the follow ng month s une sales d The ending rav materials in e tory equals 10% o the following month's raw materials production needs. Each unit of Einished goods requires 5 pounds of raw materials. The rew materials cost $2.00 per pound e. Thirty percent of raw materais purchases are ped for in the month of purchase and 70% in the following month f. The direct labor woge rate is $15 per hour. Each unit of finished goods requires two direct labor-hours g The veriable selling and administrative expense per unit sold is $1.80. The fixed selling and administrative expense per month is $60,000 15. What is the estimated net operating income for July?

Explanation / Answer

INCOME STATEMENT: Sales revenue (10,000 units @ 70) 700,000 Less: Cost of goods sold Material (50,000 pounds @2) 100,000 Labour (20,000 hours @15) 300,000 Gross margin 300,000 Less: Selling and Admin expense variable (10000 units @1.80) 18,000 Fixed 60,000 Net income for July 222000

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