Q1: [The following information applies to the questions displayed below.] Morgan
ID: 2568453 • Letter: Q
Question
Q1: [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 for its first four months of operations:
a. The budgeted selling price per unit is $65. Budgeted unit sales for June, July, August, and September are 9,600, 27,000, 29,000, and 30,000 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 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. Twenty five percent of raw materials purchases are paid for in the month of purchase and 75% in the following month.
f. The direct labor wage rate is $13 per hour. Each unit of finished goods requires two direct labor-hours.
g. The variable selling and administrative expense per unit sold is $1.60. The fixed selling and administrative expense per month is $66,000.
What is the total estimated direct labor cost for July assuming the direct labor workforce is adjusted to match the hours required to produce the forecasted number of units produced?
my answer was 574,080 which is worng and I tried this answer 5,204,420 but both numbers were incorrect.
Q2: Mondo Snow Removal's cost formula for its vehicle operating cost is $1,620 per month plus $465 per snow-day. For the month of January, the company planned for activity of 15 snow-days, but the actual level of activity was 20 snow-days. The actual vehicle operating cost for the month was $10,400. The activity variance for vehicle operating cost in January would be closest to:
a- $1,805U
b-$1,805F
c-$2,325U
d-$2,325F
Total direct labor cost $Explanation / Answer
1 Budgeted production in July =27000+(29000*30%)-(27000*30%)= 27600 Total direct labor cost = 27600*2*13= 717600 2 Vehicle operating cost in planning budget = 1620+(465*15)= 8595 Vehicle operating cost in flexible budget = 1620+(465*20)= 10920 Activity variance = 10920-8595 = 2325 U Option C is correct
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