Morganton Company makes one product and it provided the following information to
ID: 2723876 • Letter: M
Question
Morganton Company makes one product and it provided the following information to help prepare the master budget for its first four months of operations:
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.
Forty percent of credit sales are collected in the month of the sale and 60% in the following month.
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.
Forty percent of raw materials purchases are paid for in the month of purchase and 60% in the following month.
The direct labor wage rate is $12 per hour. Each unit of finished goods requires two direct labor-hours.
The variable selling and administrative expense per unit sold is $1.90. The fixed selling and administrative expense per month is $69,000.
1. According to the production budget, how many units should be produced in July?
2. If 129,200 pounds of raw materials are needed to meet production in August, how many pounds of raw materials should be purchased in July?
4. If the cost of raw material purchases in June is $188,640, what are the estimated cash disbursements for raw materials purchases in July?
5. What is the estimated accounts payable balance at the end of July?
6. What is the estimated raw materials inventory balance at the end of July?
7. What is the estimated total selling and administrative expense for July?
8. What is the estimated net operating income for July, if the company always uses an estimated predetermined plantwide overhead rate of $11 per direct labor-hour?
Morganton Company makes one product and it provided the following information to help prepare the master budget for its first four months of operations:
Explanation / Answer
June July August September Sales 9900 30000 32000 33000 Ending 9000 9600 9900 Opening 9000 9600 9900 Units to be produced 30600 32300 ( Sales+ Ending- Opening) 1 30600 units should be produced in July 2 Raw Material needed 129200 Raw material to be purchased Needed 129200 Add: Ending 9600*4 38400 Less: opening 9000*4 -36000 Raw material to be purchased 131600 3 Cost fo Raw Material Purchased in July Units 30600*4 = 122400 Cost *= $ per pound Total Cost 122400*2.5 $306,000
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