Question

Morganton Company makes one product and it provided the following information to help prepare the master budget for its four months of operations (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. What is the estimated raw materials inventory balance at the end of July? Raw material inventory balance s

Answer 1

Raw Material Inventory balance in $ at the end of July = $12,200

fax = 5* (E4+E11-011) C B K L M N O P June July August September October July August September Budgeted Sales Units 8400 588000 10000 700000 12000 840000 13000 910000 50000 100000 60000 120000 65000 130000 Rs 520001 61000 52000 Credit sales Collection June RM requirement for FG-Units as per sales 5*1 FG 42000 In $ $2*RM 84000 RM requirement for FG-Units as per ending FG 10% next month production in Ending RM Inventory Units 5200 Ending RM Inventory In $(*2) 10400 this month +10% Purchases this month ending RM 47200 In $ 94400 Payments for Purchase This month (30%) 28320 Next Month (70%) 0 Total 28320 This month (40%) Next Month (60%) 235200 0 280000 352800 336000 420000 364000 504000 6100 12200 5200 10400 546000 Total 235200 632800 756000 868000 50900 101800 59100 118200 Ending FG inventory 20% of Next month unit sales 2000 2400 2600 30540 66080 96620 35460 71260 106720 82740