Question

Morganton Company makes one product and it provided the following information to help prepare the master budget:

1. The budgeted selling price per unit is $65. Budgeted unit sales for June, July, August, and September are 8,200, 12,000, 14,000, and 15,000 units, respectively. All sales are on credit.
2. Forty percent of credit sales are collected in the month of the sale and 60% in the following month.
3. The ending finished goods inventory equals 20% of the following month’s unit sales.
4. The ending raw materials inventory equals 10% of the following month’s raw materials production needs. Each unit of finished goods requires 5 pounds of raw materials. The raw materials cost $2.00 per pound.
5. Twenty percent of raw materials purchases are paid for in the month of purchase and 80% in the following month.
6. The direct labor wage rate is $13 per hour. Each unit of finished goods requires two direct labor-hours.
7. The variable selling and administrative expense per unit sold is $1.30. The fixed selling and administrative expense per month is $62,000.

Construct an Schedule of Expected Cash Collection Budget :

Schedule of Expected Cash Collections
Beginning Accounts Receivables
June Sales			213,200	319,800
July Sales				312,000	468,000
August Sales					364,000	546,000
September Sales						390,000

Answer 1

Answer-

MORGANTON COMPANY
Schedule of Collections from sales
For the Four months ending September
Particulars	June	July	August	September	Total
Projected monthly sales units (a)	8200	12000	14000	15000	458000
Selling price per unit (b)	$65	$65	$65	$65	$65
Budgeted sales (c=a*b) $	533000	780000	910000	975000	29770000
Cash Collection
40% in month of sale	$533000*40%=$213200	$780000*40%=$312000	$910000*40%=$364000	$975000*40%= $390000	1279200
60% in following month of sale		$533000*60%=$319800	$780000*60%=$468000	$910000*60%=$546000	1333800
Total collection (d=b+c) $	213200	631800	832000	936000	2613000