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:

a. 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.

b. Forty percent of credit sales are collected in the month of the sale and 60% in the following month.

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.

e. Forty percent of raw materials purchases are paid for in the month of purchase and 60% in the following month.

f. The direct labor wage rate is $12 per hour. Each unit of finished goods requires two direct labor-hours.

g. The variable selling and administrative expense per unit sold is $1.90. The fixed selling and administrative expense per month is $69,000.

1. 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?

2. What is the estimated cost of raw materials purchases for July?

3. If the cost of raw material purchases in June is $188,640, what are the estimated cash disbursements for raw materials purchases in July?

4. What is the estimated accounts payable balance at the end of July?

5. What is the estimated raw materials inventory balance at the end of July?

6. What is the total estimated direct labor cost for July assuming the direct labor workforce is adjusted to match the hours required to produce the forecasted number of units produced?

7. If the company always uses an estimated predetermined plantwide overhead rate of $11 per direct labor-hour, what is the estimated unit product cost? (Round your answer to 2 decimal places.)

Answer 1

As per HomeworkLib policy i am allowed to answer first four questions still i am answering first 5 question for rest kindly repost i am sure you will be helped.

Budgeted sales in units Add:desired ending inventory (32000*30%) total needs less:beginnig inventory (30000*3096) required production 30000 9600 39600 9000 30600 required production in units raw materials needed per unit raw materials needed to meet production add:desired ending raw material invetory (129200*20%) total raw materials needs less:beginning inventory (122400*20%) raw materials to be purchased(a) cost per pound(bl cost of raw materials purchases(a*b) 30600 4 122400 25840 148240 24480 123760 2.5 309400 June purchases ($188,640*60%) July purchases (309400#4096) total cash disbusrements 150912 123760 274672 July purchases(a) Percent unpaid(b) Accounts payable balance 309400 60% 185640 Ending raw materials inventory (pounds) (a) Cost per pound (b) Raw material inventory balance (a) x (b) 25,840 2.50 64,600