Required information The following information applies to the questions displaye

Question

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 $60. Budgeted unit sales for June, July, August, and September are 9,800 29,000, 31,000, and 32,000 units, respectively. All sales are on credit b. Thirty percent of credit sales are collected in the month of the sale and 70% in the following month. c. The ending finished goods inventory equals 20% of the following month's unit sales. d. The ending raw materials inventory equals 10% 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. Thirty percent of raw materials purchases are paid for in the month of purchase and 70% in the following month. f. The direct labor wage rate is $15 per hour. Each unit of finished goods requires two direct labor-hours. g. The variable selling and administrative expense per unit sold is $1.80. The fixed selling and administrative expense per month is $68,000.

Explanation / Answer

Constructing the schedules Sales Budget June July August September Sales in units 9800 29000 31000 32000 Selling price/unit 60 60 60 60 Sale value 588000 1740000 1860000 1920000 Production Budget (in units) Sales budgeted 9800 29000 31000 32000 Add:Desired Ending Inventory 5800 6200 6400 Total units needed 15600 35200 37400 Less: Available in Beg. Inventory 1960 5800 6200 Production needed 13640 29400 31200 Raw materials(in Pounds) needed Production units needed 13640 29400 31200 25600 So, Raw materials(in Units) for prodn. At 4 pds./unit 54560 117600 124800 102400 Add:Desired Ending Inventory 11760 12480 10240 Total needed 66320 130080 135040 Less: Available in beg. Inv. 5456 11760 12480 Purchases reqd. 60864 118320 122560 5. Raw materials to be purchased in July     118320 pounds   (Refer table) 6. Estimated cost of raw material purchaes in July 118320*2.50= 295800 9.Estimated raw material inventory balance at end of July 12480 pounds 11.. Unit product cost Raw materials /unit ( 4 pds.* $2.50/pd.) 10 Direct labor( 2 hrs.* $ 15/hr.) 30 Variable MOH ( 2 hrs.*$ 7/hr.) 14 Estimated unit product cost 54

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