1) What are the budgeted sales for July? 2) What are the expected cash collectio
ID: 2553399 • Letter: 1
Question
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?
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 $65. Budgeted unit sales for June, July, August, and September are 9,900, 30,000, 32,000, and 33,000 units, respectively. All sales are on credit. b. Forty percent of credit sales are collected in the month of the sale and 60% in the following month. C. The ending finished goods inventory equals 30% of the following month's unit sales. d. The ending raw materials inventory equals 20% of the following month's raw materials production needs. Each unit of finished goods requires 4 pounds of raw materials. The raw materials cost $2.50 per pound. e. Forty percent of raw materials purchases are paid for in the month of purchase and 60% in the following month. f. The direct labor wage rate is $12 per hour. Each unit of finished goods requires two direct labor-hours. g. The variable selling and administrative expense per unit sold is $1.90. The fixed selling and administrative expense per month is $69,000.Explanation / Answer
Answer:-1)- Budgeted sales for July = 30000 units*$65 per unit =$1950000
2)-Expected cash collections for July =June sales collections (60%)+ July sales collections (40%)
=(9900 units*$65 per unit)*60%+( 30000 units*$65 per unit)*40%
=$643500*60%+$1950000*40%
=$386100+$780000
=$1166100
3)-Accounts receivable balance at the end of July = (30000 units*$65 per unit)*60%
=$1950000*60%
=$1170000
4)-Production budget for July =Sales units+ Closing inventory of finished goods+ Opening inventory of finished goods
=30000 units +(32000 units*30%)- (30000 units*30%)
=30000 units+9600 units-9000 units
=30600 units
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