[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 9,300, 24,000, 26,000, and 27,000 units, respectively. All sales are on credit. |
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b. |
Forty percent of credit sales are collected in the month of the sale and 60% in the following month. |
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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. |
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e. |
Thirty percent of raw materials purchases are paid for in the month of purchase and 70% in the following month. |
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f. |
The direct labor wage rate is $14 per hour. Each unit of finished goods requires two direct labor-hours. |
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g. |
The variable selling and administrative expense per unit sold is $1.90. The fixed selling and administrative expense per month is $63,000.
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5)
Unit produced in July | 24600 |
requirement per unit | 4 |
Total material requirement of material | 98400 |
Ending raw material requirement [105200*.20] | 21040 |
less:Beginning raw material [98400*.20] | (19680) |
Raw material to be purchased | 99760 |
6)cost of raw materials to be purchased. = 99760 * 2.5 = $ 249400
7)
cash disbursements for raw materials purchases in July = [158880*.70]+ [249400*.30]
= 111216+74820
= $ 186036
8)estimated accounts payable balance at the end of July = 249400[1-.30]
= $ 174580
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