Question

TB MC Qu. 8-149 Petrini Corporation makes one product ...

Petrini Corporation makes one product and it provided the following information to help prepare the master budget for the next four months of operations:

1. The budgeted selling price per unit is $110. Budgeted unit sales for January, February, March, and April are 7,500, 10,600, 12,000, and 11,700 units, respectively. All sales are on credit.
2. Regarding credit sales, 30% are collected in the month of the sale and 70% in the following month.
3. The ending finished goods inventory equals 30% of the following month's 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 $4.00 per pound.
5. Regarding raw materials purchases, 40% are paid for in the month of purchase and 60% in the following month.
6. The direct labor wage rate is $23.00 per hour. Each unit of finished goods requires 2.6 direct labor-hours.
7. Manufacturing overhead is entirely variable and is $8.00 per direct labor-hour.
8. The variable selling and administrative expense per unit sold is $1.70. The fixed selling and administrative expense per month is $70,000.

The estimated net operating income (loss) for February is closest to: (Round your intermediate calculations to 2 decimal places.)

Answer 1

Direct materials per unit	20.00	=5*4
Direct labor per unit	59.80	=23*2.6
Variable overhead per unit	20.80	=8*2.6
Cost of goods sold per unit	100.60
Sales revenue	1166000	=10600*110
Less: Cost of goods sold	1066360	=10600*100.60
Gross margin	99640
Less: Selling and administrative expenses	88020	=(10600*1.70)+70000
Net operating income (loss) for February	11620