Question

Required information The Foundational 15 [LO8-2, LO8-3, LO8-4, LO8-5, LO8-7, LO8-9, LO8-10] [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: a. The budgeted selling price per unit is $70. Budgeted unit sales for June, July, August, and September are 8,400, 10,000, 12,000, and 13,000 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 20% of the following month's unit sales. d. 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. e. Thirty percent of raw materials purchases are paid for in the month of purchase and 70% in the following month. f. The direct labor wage rate is $15 per hour. Each unit of finished goods requires two direct labor-hours. g. The variable selling and administrative expense per unit sold is $1.80. The fixed selling and administrative expense per month is $60,000. Foundational 8-1 Required: 1. What are the budgeted sales for July? Budgeted sales

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Answer 1

1. Budgeted sales for July: Budgeted units sales 10,000 units Budgeted selling price $70 per unit Bulgeted sabes fogn July $1,00,000 2 Expected cash collections for July : cash collections from - June sales $352800 (8400 x $ 70% 60%) - July sales $280000 (10,000 x $ 70x 40%) Total cash collections $632800 Accounts receivable balance at the end of July: Accounts receivable town -July sales in August $420000 (10,000x $ 70% 60%) Accounts receivable balance at the end of July $420,000 3

4 units to be produced in July : pwduction Budget (units) Budgeted sales 10,000 Addi Estimated Ending Inventory of finished Goods 2,400 (12.,000 units X 20%) Total units required 12,400 Less: Beginning Inventory le estimated Ending inventory at the end of June (2,000) (10,000 X 20"%) units to be produced in 10,400 5. Raw materials to be purchased in Julys Rowmaterials required for production 52,000 lbs. (10,400 x 9)) Estimated raw material ending inventory 6,100 lbs (61,000x10%) Total requrements 58,100 lbs. Beginning Inventory ic Estimated Nawmakerial ending Inventory (52. poo XI0%) 13; Raumaterials to be purchased in July 52,900 lbs.

6. Estimated cost of strumaterial pwiches lon July Estimated Hawmaterial purchives 520000 Rawmaterial cost per pound Estimated cost of raw material purchases $105800 Total cash disbursements for raw material purchases Eslimated cosh disbursement for raw material purchases in of - June $62,216 ($88,880x70%) - July $31740 ($105800 X 30%) Total cash disbursements for $93,956 raw material purchases Estimated accounts payable balance at end of July Accounts payable from July purchases $74060 to be paid in August ($105800x70%) estimated accounts payable balance $74060 For at end of July for

9. Estimated rawmaterial inventory balance at the end of July. Estimated rawmaterial inventory units 6100 lbs. Rawmaterial cost per pound $2. Estimated rawmaterial inventory $12,200 balance at end of July than a