Question

41) Luchini Corporation makes one product and it provided the following information to help prepare the master budget for the next four months of operations: a. The budgeted selling price per unit is $111. Budgeted unit sales for April, May, June, and July are 7,100, 10, 100, 13,300, and 14,000 units, respectively. All sales are on credit. b. Regarding credit sales, 40% are collected in the month of the sale and 60% in the following month. C. The ending finished goods inventory equals 10% of the following month's sales. d. The ending raw materials inventory equals 30% of the following month's raw materials production needs. Each unit of finished goods requires 5 pounds of raw materials. The raw materials cost $5.00 per pound. e. Regarding raw materials purchases, 40% are paid for in the month of purchase and 60% in the following month. f. The direct labor wage rate is $18.00 per hour. Each unit of finished goods requires 2.9 direct labor-hours. g. Variable manufacturing overhead is $7.00 per direct labor-hour. Fixed manufacturing overhead is zero.

Answer 1

Accounts receivable balance at the end of May = 10,100*$111*60% = $672,660

Hence option C is correct.