Q1

Mumbower Corporation makes one product and has provided the following information to help prepare the master budget for the next four months of operations:

	Budgeted selling price per unit	$103
	Budgeted unit sales (all on credit):
	October	9,500
	November	10,700
	December	9,800
	January	10,800

	Raw materials requirement per unit of output	4	pounds
	Raw materials cost	$5.00	per pound
	Direct labor requirement per unit of output	2.8	direct labor-hours
	Direct labor wage rate	$19.00	per direct labor-hour
	Variable selling and administrative expense	$1.60	per unit sold
	Fixed selling and administrative expense	$80,000	per month

Credit sales are collected:

40% in the month of the sale

60% in the following month

Raw materials purchases are paid:

40% in the month of purchase

60% in the following month

The ending finished goods inventory should equal 20% of the following month's sales. The ending raw materials inventory should equal 40% of the following month's raw materials production needs.

Required:

a. What are the budgeted sales for November?

b. What are the expected cash collections for November?

c. What is the budgeted accounts receivable balance at the end of November?

d. According to the production budget, how many units should be produced in November?

e. If 40,000 pounds of raw materials are needed for production in December, how many pounds of raw materials should be purchased in November?

f. What is the estimated cost of raw materials purchases for November?

g. If the cost of raw material purchases in October is $201,040, then in November what are the total estimated cash disbursements for raw materials purchases?

h. What is the estimated accounts payable balance at the end of November?

i. What is the estimated raw materials inventory balance at the end of November?

j. What is the total estimated direct labor cost for November assuming the direct labor workforce is adjusted to match the hours required to produce the forecasted number of units produced?

k. For simplicity, we will assume that there is no fixed manufacturing overhead and that the variable manufacturing overhead is $7.00 per direct labor-hour. What is the estimated unit product cost?

l. What is the estimated finished goods inventory balance at the end of November?

m. What is the estimated cost of goods sold and gross margin for November?

n. What is the estimated total selling and administrative expense for November?

o. What is the estimated net operating income for November?