Question
Morganton Company makes one product and it provided the following information to help prepare the master budget for its first four months of operations: a.
Morganton Company makes one product and it provided the following information to help prepare the master budget for its first four months of operations: |
a. | The budgeted selling price per unit is $70. Budgeted unit sales for June, July, August, and September are 9,100, 22,000, 24,000, and 25,000 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 months unit sales. | ||
d. | The ending raw materials inventory equals 10% of the following months raw materials production needs. Each unit of finished goods requires 4 pounds of raw materials. The raw materials cost $2.50 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 $1.70. The fixed selling and administrative expense per month is $61,000. Please answer: 1.) What are the expected cash collections for July? 2.) What is the accounts receivable balance at the end of July?
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