Question

Required Information {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 $60. Budgeted unit sales for June, July, August, and September are 9,200, 23,000, 25,000, and 26,000 units, respectively. All sales are on credit. b. Thirty percent of credit sales are collected in the month of the sale and 70% 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 4 pounds of raw materials. The raw materials cost $2.50 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 $13 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 $62,000 6. If 100,800 pounds of raw materials are needed to meet production in August, what is the estimated cost of raw materials purchases for July? Cost of raw materials to be purchased

Answer 1

Answer-6)- Cost of raw materials to be purchased = $235800.

Explanation-

MORGANTON COMPANY
Raw Material Purchase Budget
Particluars	July Month
Budgeted production in units (a)	23400
Pounds of Raw material required per unit (b)	4 pound
Raw material required for production pounds (c=a*b)	93600
Add:- Desired ending inventory	(100800 pounds*10% =10080
10% of next month production needs
Less:= Opening inventory (lbs)	(93600 pounds*10% =9360
Budgeted Raw material purchase (lbs) (d)	94320
Raw material cost per pound (e)	$2.50 per pound
Materials purchases costs (f=d*e)	$235800

MORGANTON COMPANY
Production Budget
For the month of July
Particulars		July	August
		Units	Units
Budgeted sales		23000	25000
Add:- Closing Inventory		25000*20%=5000	26000*20%=5200
20% of Following month sale
Less:- Opening Inventory		23000*20%=4600	25000*20%=5000
No. of units to be produced		23400	25200