QUESTION 8

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

1. 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.
2. Forty percent of credit sales are collected in the month of the sale and 60% in the following month.
3. The ending finished goods inventory equals 20% of the following months unit sales.
4. The ending raw materials inventory equals 10% of the following months raw materials production needs. Each unit of finished goods requires 5 kilograms of raw materials. The raw materials cost $2.00 per kilogram.
5. Thirty percent of raw materials purchases are paid for in the month of purchase and 70% in the following month.
6. The direct labour wage rate is $15 per hour. Each unit of finished goods requires two direct labour-hours.
7. The variable selling and administrative expense per unit sold is $1.80. The fixed selling and administrative expense per month is $60,000.

If 61,000 kilograms of raw materials are needed to meet production in August, how many kilograms of raw materials should be purchased in July?