Question

[The following information applies to the questions displayed below.] Morganton Company makes one product and it...

[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:

  1. The budgeted selling price per unit is $70. Budgeted unit sales for June, July, August, and September are 8,500, 16,000, 18,000, and 19,000 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. Thirty percent of raw materials purchases are paid for in the month of purchase and 70% 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 $1.70. The fixed selling and administrative expense per month is $66,000.

If we assume that there is no fixed manufacturing overhead and the variable manufacturing overhead is $8 per direct labor-hour, what is the estimated cost of goods sold and gross margin for July?

What is the estimated total selling and administrative expense for July?

If we assume that there is no fixed manufacturing overhead and the variable manufacturing overhead is $8 per direct labor-hour, what is the estimated net operating income for July?

0 1
Add a comment Improve this question Transcribed image text
Answer #1
1
Direct materials 160000 =16000*5*2
Direct labor 416000 =16000*2*13
Variable manufacturing overhead 256000 =16000*2*8
Estimated cost of goods sold 832000
Sales revenue 1120000 =16000*70
Less: Cost of goods sold 832000
Gross margin 288000
2
Estimated total selling and administrative expense 93200 =66000+(16000*1.7)
3
Gross margin 288000
Less: Selling and administrative expense 93200
Estimated net operating income 194800
Add a comment
Know the answer?
Add Answer to:
[The following information applies to the questions displayed below.] Morganton Company makes one product and it...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions
ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT