Luchini Corporation makes one product and it provided the following information to help prepare the master budget for the next four months of operations: a. The budgeted selling price per unit is $111. Budgeted unit sales for April, May, June, and July are 7,100, 10,100, 13,300, and 14,000 units, respectively. All sales are on credit. b. Regarding credit sales, 40% are collected in the month of the sale and 60% in the following month. c. The ending finished goods inventory equals 10% of the following month's sales. d. The ending raw materials inventory equals 30% of the following month's raw materials production needs. Each unit of finished goods requires 5 pounds of raw materials. The raw materials cost $5.00 per pound. e. Regarding raw materials purchases, 40% are paid for in the month of purchase and 60% in the following month. f. The direct labor wage rate is $18.00 per hour. Each unit of finished goods requires 2.9 direct labor-hours. g. Variable manufacturing overhead is $7.00 per direct labor-hour. Fixed manufacturing overhead is zero. The estimated finished goods inventory balance at the end of May is closest to:
Luchini Corporation makes one product and it provided the following information to help prepare the master budget for the next four months of operations: a. The budgeted selling price per unit is $111. Budgeted unit sales for April, May, June, and July are 7,100, 10,100, 13,300, and 14,000 units, respectively. All sales are on credit. b. Regarding credit sales, 40% are collected in the month of the sale and 60% in the following month. c. The ending finished goods inventory equals 10% of the following month's sales. d. The ending raw materials inventory equals 30% of the following month's raw materials production needs. Each unit of finished goods requires 5 pounds of raw materials. The raw materials cost $5.00 per pound. e. Regarding raw materials purchases, 40% are paid for in the month of purchase and 60% in the following month. f. The direct labor wage rate is $18.00 per hour. Each unit of finished goods requires 2.9 direct labor-hours. g. Variable manufacturing overhead is $7.00 per direct labor-hour. Fixed manufacturing overhead is zero. The estimated finished goods inventory balance at the end of May is closest to:
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
Question
Transcribed Image Text:The estimated finished goods inventory balance at the end of May is closest to:
Multiple Choice
$129,675
$111,986
$102,676
$26,999
Transcribed Image Text:Luchini Corporation makes one product and it provided the following information to help prepare the master budget for the next four months of operations:
a. The budgeted selling price per unit is $111. Budgeted unit sales for April, May, June, and July are 7,100, 10,100, 13,300, and 14,000 units, respectively. All sales are on credit.
b. Regarding credit sales, 40% are collected in the month of the sale and 60% in the following month.
c. The ending finished goods inventory equals 10% of the following month's sales.
d. The ending raw materials inventory equals 30% of the following month's raw materials production needs. Each unit of finished goods requires 5 pounds of raw materials.
The raw materials cost $5.00 per pound.
e. Regarding raw materials purchases, 40% are paid for in the month of purchase and 60% in the following month.
f. The direct labor wage rate is $18.00 per hour. Each unit of finished goods requires 2.9 direct labor-hours.
g. Variable manufacturing overhead is $7.00 per direct labor-hour. Fixed manufacturing overhead is zero.
The estimated finished goods inventory balance at the end of May is closest to:
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