Question

Selling price	$75.00
June	8000
July	9000
August	10000
September	12000

Credit Sales Collected in the month of the sale	40%
Following month	60%
Ending finished goods inventory of the following month's unit sales	20%
Ending raw materials inventory of the following month's raw materials production needs	10%
Raw materials purchases are paid for in the month of purchase	30%
Following month	70%

Pounds of raw materials required for each unit of finished goods	5
Raw materials cost per pound	$2.00
Direct labor wage rate per hour	$15.00
Direct labor hours required for each unit of finished goods	2
Variable selling & administrative expense per unit sold	$1.80
fixed selling and administrative expense per month	$60,000.00

5. If 52,000 pounds of raw materials are needed to meet production in August, how many pounds of raw materials should be purchased in July?

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

7. If the cost of raw material purchases in June is $88,880, what are the estimated cash disbursements for raw materials purchases in July?

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

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

10.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?

11.If the company always uses an estimated predetermined plantwide overhead rate of $10 per direct labor-hour, what is the estimated unit product cost?

12.What is the estimated finished goods inventory balance at the end of July?

13.What is the estimated cost of goods sold and gross margin for July?

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

15.What is the estimated net operating income for July?

Assumptions to use for the budget:

1. the selling price is $75.00 per unit.

2. the beginning accounts receivable balance is $315,000

3. the beginning accounts payable balance is $49,000.

4. the beginning cash balance is $49,500

Other than the above all other information is as presented in the text.

Answer 1

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