Question
1. Petrini Corporation makes one product and it provided the following information to help prepare the master budget for the next four months of operations:
1. Petrini Corporation makes one product and it provided the following information to help prepare the master budget for the next four months of operations:
The budgeted selling price per unit is $110. Budgeted unit sales for January, February, March, and April are 7,500, 10,600, 12,000, and 11,700 units, respectively. All sales are on credit.
Regarding credit sales, 30% are collected in the month of the sale and 70% in the following month.
The ending finished goods inventory equals 30% of the following month's sales.
The ending raw materials inventory equals 10% of the following months raw materials production needs. Each unit of finished goods requires 5 pounds of raw materials. The raw materials cost $4.00 per pound.
Regarding raw materials purchases, 40% are paid for in the month of purchase and 60% in the following month.
The direct labor wage rate is $23.00 per hour. Each unit of finished goods requires 2.6 direct labor-hours.
Manufacturing overhead is entirely variable and is $8.00 per direct labor-hour.
The variable selling and administrative expense per unit sold is $1.70. The fixed selling and administrative expense per month is $70,000.
The expected cash collections for February is closest to:
$577,500
$927,300
$349,800
$825,000
2. Fuson Corporation makes one product and has provided the following information to help prepare the master budget for the next four months of operations:
Budgeted selling price per unit | $ | 118 |
Budgeted unit sales (all on credit): | ||
October | 9,600 | |
November | 10,100 | |
December | 13,700 | |
January | 11,300 | |
Raw materials requirement per unit of output | 3 | pounds | |
Raw materials cost | $ | 4.00 | per pound |
Direct labor requirement per unit of output | 2.7 | direct labor-hours | |
Direct labor wage rate | $ | 23.00 | per direct labor-hour |
Predetermined overhead rate (all variable) | $ | 12.00 | per direct labor-hour |
Credit sales are collected:
30% in the month of the sale
70% in the following month
Raw materials purchases are paid:
30% in the month of purchase
70% in the following month
The ending finished goods inventory should equal 10% of the following month's sales. The ending raw materials inventory should equal 10% of the following months raw materials production needs.
The estimated finished goods inventory balance at the end of November is closest to:
$44,388
$117,957
$101,517
$145,905
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