Question
Boredtown Company makes one product, and has provided the following information to help prepare the master budget for its first four months of operations: The
Boredtown Company makes one product, and has provided the following information to help prepare the master budget for its first four months of operations:
- The budgeted selling price per unit is $65. Budgeted unit sales for June, July, August, and September are 9,600, 27,000, 29,000, and 30,000 units, respectively. All sales are on credit.
- Thirty percent of credit sales are collected in the month of the sale and 70% in the following month.
- The ending finished goods inventory equals 30% of the following months unit sales.
- The ending raw materials inventory equals 20% of the following months raw materials production needs. Each unit of finished goods requires 4 kilograms of raw materials. The raw materials cost $2.50 per kilogram.
- Twenty five percent of raw materials purchases are paid for in the month of purchase and 75% in the following month.
- The direct labour wage rate is $13 per hour. Each unit of finished goods requires two direct labour-hours.
- The variable selling and administrative expense per unit sold is $1.60. The fixed selling and administrative expense per month is $66,000
If the company always uses an estimated predetermined plantwide overhead rate of $9 per direct labour-hour, what is the estimated unit product cost? (Round your answer to 2 decimal places.)
What is the estimated finished goods inventory balance at the end of July? (Round intermediate calculations to 2 decimal places.)
What is the estimated cost of goods sold and gross margin for July? (Round intermediate calculations to 2 decimal places.)
What is the estimated total selling and administrative expense for July?
What is the estimated operating income for July?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started