Question
[The following information applies to the questions displayed below.] Morganton Company makes one product and it provided the following information to help prepare the master
[The following information applies to the questions displayed below.] |
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 $65. Budgeted unit sales for June, July, August, and September are 9,300, 24,000, 26,000, and 27,000 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 30% of the following months unit sales. | ||||||||
d. | The ending raw materials inventory equals 20% 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. | 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 $14 per hour. Each unit of finished goods requires two direct labor-hours. | ||||||||
g. | The variable selling and administrative expense per unit sold is $1.90. The fixed selling and administrative expense per month is $63,000.
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