1.Morganton Company makes one product and it provided the following information to help prepare the master budget only for July:

a. The budgeted selling price per unit is $70. Budgeted unit sales for June, July, August, and September are 10,000, 12,000 14,000, 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. Twenty 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 $62,000.

1. What is the budgeted sales revenue for July?

Unit sales (a)......................................................

Selling price per unit (b) ....................................

Total sales (a) (b) ............................................

2. What are the expected cash collections for July?

June sales:?..........................................

July sales:..........................................

Total cash collections......................................?

3.What is the accounts receivable balance at the end of July?

July sales (a) ......................................................

Percent uncollected (b) ......................................

Accounts receivable (a) (b) ............................

4. According to the production budget, how many units should be produced in July?

Budgeted sales in units ......................................

Add desired ending inventory* .............................

Total needs ............................................................

Less beginning inventory**..................................

Required production .............................................

5. If 69,000 pounds of raw materials are needed to meet production in August, how many pounds of raw materials should be purchased in July?

Required production in units ..............................................................

Raw materials needed per unit (pounds).............................................

Raw materials needed to meet production ..........................................

Add desired ending raw materials inventory* ....................................

Total raw material needs ....................................................................

Less beginning raw materials inventory ** ........................................

Raw materials to be purchased (pounds) ............................................

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

Raw materials to be purchased (pounds) (a)......................................

Cost per pound (b) ..............................................................................

Cost of raw material purchases (a) (b).............................................

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

June purchases:?.............................................

July purchases:..........................................

Total cash disbursements .................................

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

July purchases (a) ..............................................

Percent unpaid (b)..............................................

Accounts payable (a) (b) ................................

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

Ending raw materials inventory (pounds) (a) .....................................

Cost per pound (b) ..............................................................................

Raw material inventory balance (a) (b) ...........................................

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?

Required production in units ....................................

Direct labor hours per unit ........................................

Total direct labor-hours needed (a) ...........................

Direct labor cost per hour (b)....................................

Total direct labor cost (a) (b) .................................

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

Direct materials.......................................

Direct labor .............................................

Manufacturing overhead.........................

Unit product cost.....................................

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

Ending finished goods inventory in units (a)......................................

Unit product cost (b)...........................................................................

Ending finished goods inventory (a) (b)..........................................

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

Unit sales (a).......................................................................................

Unit product cost (b)...........................................................................

Estimated cost of goods sold (a) (b) ................................................

The estimated gross margin for July is computed as follows:

Total sales (a)......................................................................................

Cost of goods sold (b).........................................................................

Estimated gross margin (a) - (b).........................................................

14. The estimated selling and administrative expense for July is computed as follows:

Budgeted unit sales ..................................................................

Variable selling and administrative .........................................

expense per unit ...................................................................

Total variable expense .............................................................

Fixed selling and administrative expenses...............................

Total selling and administrative expenses ...............................

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

Gross margin (a) .................................................................................

Selling and administrative expenses (b) .............................................

Net operating income (a) - (b)............................................................

1) Sales Budget and Cash Collection June July August September October Budgeted Sales units a 10,000 12,000 14,000 13,000 Selling price per unit b $ 70 $ 70 70 $ 70 Budgeted Sales Revenue c =a*b $ 7,00,000.00 $ 8,40,000.00 $ 9,80,000.00 $ 9,10,000.00 $ Cash Collection Opening balance d $ $ 40% of credit sale e=c*40% $ 2,80,000.00 $ 3,36,000.00 $ 3,92,000.00 $ 3,64,000.00 $ 60% of credit sale in next month f=c *60% $ $ 4,20,000.00 $ 5,04,000.00 $ 5,88,000.00 $ 5,46,000.00 Total Expected Cash collection g=d+e+f $ 2,80,000.00 $ 7,56,000.00 $ 8,96,000.00 $ 9,52,000.00 $ 5,46,000.00 2) Budgeted Cash payment June July August September October Budgeted Sales units a 10,000 12,000 14,00 3,000 Add: Closing stock of FG= 20% * Next month's sales b=a*20% 2,400 2,800 ,60 Less: Opening stock of FG 2,400 2,80 2,600 Budgeted Production units dza+b-c 12,400 12,400 13,800 10,400 Direct material consumption e=d$5 62,00 2,000 59,00 52,000 Closing stock= 10%*Next month's production f=b*10% 6,900 5,20 Opening stock g=f 6,200 6,90 5,200 Budgeted Purchase unit h=e+f-g 68,200 62,700 67,300 46,800 Budgeted Cost of Direct material purchase i=h*$2.00 $ 1,36,400.00 $ 1,25,400.00 $ 1,34,600.00 $ 93,600.00 $ Direct labour hour required j=d*2 24,800 24,800 27,600 20,800 Budgeted Cost of Direct labour k=j*$15 $ 3,72,000.00 $ 3,72,000.00 $ 4,14,000.00 $ 3,12,000.00 $ Variable manufacturing overhead 1=d*$0 Fixed manufacturing overhead m Budgeted Manufacturing overhead n=l+m $ $ $ Variable selling overhead o=a*$1.80 18,000 21,600 25,200 23,400 Fixed selling overhead P 52,000 62,000 52,000 62,000 62,000 Budgeted Selliing & adm overhead q=o+p S 80,000.00 S 83,600.00 $ 87,200.00 $ 85,400.00 $ 62,000.00 Total operating overhead r=k+n+q 4,52,000 4,55,600 5,01,200 3,97,400 62,000 Less: Depreciation S $ Operating overhead(other than material) tar-s S 4,52,000 $ 4,55,600 IS 5,01,200 $ 3,97,400 $ 62,000 Cash payment 20% of Direct material purchases uzi*20% $ 27,280 $ 25,080 $ 26,920 18,720 $ 70% of Direct material purchases in next month v=i*70% 5,480 87,780 94,220 $ 65,520 Payment for operating overhead w=t 4,52,000 $ 4,55,600 $ 5,01,200 $ 3,97,400 $ 62,000 Payment for account payable Total expected cash payment y=utv+w+x $ 4,79,280 $ 5,76,160 $ 6,15,900 $ 5,10,340 $ 1,27,520 3) Cash Budget June July August September October Opening balance a $ $ 1,79,840.00 $ 4,59,940.00 $ 9,01,600.00 Add: Cash collection $ 7,56,000.00 $ 8,96,000.00 $ 9,52,000.00 $ 5,46,000.00 Less: Cash payment C $ (5,76,160.00) $ (6,15,900.00) $ (5,10,340.00) $ (1,27,520.00) Preliminary Cash balance dza+b+c $ 1,79,840.00 $ 4,59,940.00 $ 9,01,600.00 $ 13,20,080.00 Add: Borrow $ S S Closing Cash balance 1,79,840 $ 4,59,940 $ 9,01,600 $ 13,20,080 3) Budgeted Income statement July August September Quarter total Budgeted Sales Revenue a 8,40,000.00 9,80,000.00 9,10,000.00 27,30,000.00 Budgeted Production units 12,400.00 13,800.00 10,400.00 36,600.00 Budgeted Cost of Direct material purchase b 1,25,400.00 1,34,600.00 93,600.00 3,53,600.00 Budgeted Cost of Direct labour 3,72,000.00 4,14,000.00 3,12,000.00 10,98,000.00 Budgeted Manufacturing overhead d Budgeted Cost of good sold e=b+c+d 4,97,400.00 5,48,600.00 4,05,600.00 14,51,600.00 Gross Margin f=a-e 3,42,600.00 4,31,400.00 5,04,400.00 12,78,400.00 Budgeted Selling & adm overhead g 83,600.00 87,200.00 35,400.00 2,56,200.00 Budgeted Income/(loss) h=f-g 2,59,000.00 3,44,200.00 4,19,000.00 10,22,200.00