Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Morganton Company makes one product and it provided the following information to help prepare the master budget for its first four months of operations: The

Morganton Company makes one product and it 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 8,700, 18,000, 20,000, and 21,000 units, respectively. All sales are on credit.

Forty percent of credit sales are collected in the month of the sale and 60% 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 5 pounds of raw materials. The raw materials cost $2.00 per pound.

Forty percent of raw materials purchases are paid for in the month of purchase and 60% in the following month.

The direct labor wage rate is $15 per hour. Each unit of finished goods requires two direct labor-hours.

The variable selling and administrative expense per unit sold is $1.90. The fixed selling and administrative expense per month is $68,000.

QUESTIONS:

1. If 101,500 pounds of raw materials are needed to meet production in August, how many pounds of raw materials should be purchased in July?

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

3. If the cost of raw material purchases in June is $129,120, what are the estimated cash disbursements for raw materials purchases in July?

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

5. What is the estimated raw materials inventory balance (in dollars) at the end of July?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Database Security And Auditing Protecting Data Integrity And Accessibility

Authors: Hassan A. Afyouni

1st Edition

0619215593, 9780619215590

More Books

Students also viewed these Accounting questions

Question

Under what circumstances is polygraph testing of employees legal?

Answered: 1 week ago