Question

Required information The Foundational 15 [LO8-2, L08-3, 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 $60. Budgeted unit sales for June, July, August, and September are 9,500, 26,000, 28,000, and 29,000 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 25% of the following month's unit sales. d. The ending raw materials inventory equals 15% of the following month's raw materials production needs. Each unit of finished goods requires 4 pounds of raw materials. The raw materials cost $2.40 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 $1.50. The fixed selling and administrative expense per month is $65,000 Foundational 8-5 5. If 113,000 pounds of raw materials are needed to meet production in August, how many pounds of raw materials should be purchased in July? pounds Raw materials to be purchased

Answer 1

5
Budgeted sales for July	26000
Add: Desired ending inventory	7000	=28000*25%
Less: Beginning inventory	-6500	=26000*25%
Budgeted production for July	26500
X Raw materials per unit	4
Raw materials required for production	106000
Add: Desired ending inventory	16950	=113000*15%
Less: Beginning inventory	-15900	=106000*15%
Raw materials to be purchased	107050	pounds