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 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 sixty percent 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 percent of the following months 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. 1. What are the budgeted sales for July? 2. What are the expected cash collections for July? 3. What is the accounts receivable balance at the end of July? 4. According to the production budget, how many units should be produced in July? 5. If 61,000 pounds of raw materials are needed to meet production in August, how many pounds of raw materials should be purchased in July? 6. What is the estimated cost of raw materials purchases for July? 7. If the cost of raw material purchases in June is $88,880, what are the estimated cash disbursements for raw materials purchases in July? 8. What is the estimated accounts payable balance at the end of July? 9. What is the estimated raw materials inventory balance at the end of July? 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? 11. If the company always uses an estimated predetermined plantwide overhead rate of $10 per direct labor hour, what is the estimated unit product cost? 12. What is the estimated finished good inventory balance at the end of July? 13. What is the estimated cost of goods sold and gross margin for July? 14. What is the estimated total selling and administrative expense of July? 15. What is the estimated net operating income for July? Please use the excel form uploaded for Foundational 15

1 Unit sales Selling price per unit Total sales 2. June sales July July sales Total Cash collections 3 July sales Percent collected Accounts Receivable 4 Budgeted sales in units Add desired ending inventory Total needs Less beginning inventory Required production 5. Required production in units Raw materials needed per unit Raw materials needed to meet production Add desired ending raw materials inventory Total raw materials needs Less beginning raw materials inventory Raw materials to be purchased 6 Raw materials to be purchased (pounds) Cost per pound Cost of raw material purchases 7 June purchases July July July purchases Total cash disbursements 8 July purchases Percent unpaid Accounts Payable 9 Ending raw materials inventory (pounds) Cost per pound Raw material inventory balance 10 Required production in units Direct labor hours per unit Total direct labor-hours needed Direct labor cost per hour Total direct labor cost 11 Direct materials Direct labor Manufacturing overhead Unit product cost 12 Ending finished goods inventory in units Unit product cost Ending finished goods inventory 13 Unit sales Unit product cost Estimated cost of goods sold July Quantity Cost Per pound hour hour The estimated gross margin for July: Total sales Cost of goods sold Estimated Gross margin July 14 Budgeted unit sales Variable selling and administrative expense per unit Total variable expense Fixed selling and adminisrative expenses Total selling and administrative expenses 15 Gross margin Selling and administrative expenses Net operating income Total 1. 2. 3