Morganton Company makes one product and it provided the following information to help prepare the master budget: The budgeted selling price per unit is $65. Budgeted unit sales for June, July, August, and September are 8,400, 15,000, 17,000, and 18,000 units, respectively. All sales are on credit. Thirty percent of credit sales are collected in the month of the sale and 70% in the following month. The ending finished goods inventory equals 30% of the following month’s unit sales. The ending raw materials inventory equals 20% of the following month’s raw materials production needs. Each unit of finished goods requires 5 pounds of raw materials. The raw materials cost $2.50 per pound. Thirty percent of raw materials purchases are paid for in the month of purchase and 70% in the following month. The direct labor wage rate is $12 per hour. Each unit of finished goods requires two direct labor-hours. The variable selling and administrative expense per unit sold is $1.60. The fixed selling and administrative expense per month is $65,000. If 86,500 pounds of raw materials are needed to meet production in August, what is the estimated cost of raw materials purchases for July?
Morganton Company makes one product and it provided the following information to help prepare the master budget: The budgeted selling price per unit is $65. Budgeted unit sales for June, July, August, and September are 8,400, 15,000, 17,000, and 18,000 units, respectively. All sales are on credit. Thirty percent of credit sales are collected in the month of the sale and 70% in the following month. The ending finished goods inventory equals 30% of the following month’s unit sales. The ending raw materials inventory equals 20% of the following month’s raw materials production needs. Each unit of finished goods requires 5 pounds of raw materials. The raw materials cost $2.50 per pound. Thirty percent of raw materials purchases are paid for in the month of purchase and 70% in the following month. The direct labor wage rate is $12 per hour. Each unit of finished goods requires two direct labor-hours. The variable selling and administrative expense per unit sold is $1.60. The fixed selling and administrative expense per month is $65,000. If 86,500 pounds of raw materials are needed to meet production in August, what is the estimated cost of raw materials purchases for July?
Morganton Company makes one product and it provided the following information to help prepare the master budget: The budgeted selling price per unit is $65. Budgeted unit sales for June, July, August, and September are 8,400, 15,000, 17,000, and 18,000 units, respectively. All sales are on credit. Thirty percent of credit sales are collected in the month of the sale and 70% in the following month. The ending finished goods inventory equals 30% of the following month’s unit sales. The ending raw materials inventory equals 20% of the following month’s raw materials production needs. Each unit of finished goods requires 5 pounds of raw materials. The raw materials cost $2.50 per pound. Thirty percent of raw materials purchases are paid for in the month of purchase and 70% in the following month. The direct labor wage rate is $12 per hour. Each unit of finished goods requires two direct labor-hours. The variable selling and administrative expense per unit sold is $1.60. The fixed selling and administrative expense per month is $65,000. If 86,500 pounds of raw materials are needed to meet production in August, what is the estimated cost of raw materials purchases for July?
Morganton Company makes one product and it provided the following information to help prepare the master budget:
The budgeted selling price per unit is $65. Budgeted unit sales for June, July, August, and September are 8,400, 15,000, 17,000, and 18,000 units, respectively. All sales are on credit.
Thirty percent of credit sales are collected in the month of the sale and 70% in the following month.
The ending finished goods inventory equals 30% of the following month’s unit sales.
The ending raw materials inventory equals 20% of the following month’s raw materials production needs. Each unit of finished goods requires 5 pounds of raw materials. The raw materials cost $2.50 per pound.
Thirty percent of raw materials purchases are paid for in the month of purchase and 70% in the following month.
The direct labor wage rate is $12 per hour. Each unit of finished goods requires two direct labor-hours.
The variable selling and administrative expense per unit sold is $1.60. The fixed selling and administrative expense per month is $65,000.
If 86,500 pounds of raw materials are needed to meet production in August, what is the estimated cost of raw materials purchases for July?
Morganton Company makes one product and it provided the following information to help prepare the master budget:
The budgeted selling price per unit is $65. Budgeted unit sales for June, July, August, and September are 8,400, 15,000, 17,000, and 18,000 units, respectively. All sales are on credit.
Thirty percent of credit sales are collected in the month of the sale and 70% in the following month.
The ending finished goods inventory equals 30% of the following month’s unit sales.
The ending raw materials inventory equals 20% of the following month’s raw materials production needs. Each unit of finished goods requires 5 pounds of raw materials. The raw materials cost $2.50 per pound.
Thirty percent of raw materials purchases are paid for in the month of purchase and 70% in the following month.
The direct labor wage rate is $12 per hour. Each unit of finished goods requires two direct labor-hours.
The variable selling and administrative expense per unit sold is $1.60. The fixed selling and administrative expense per month is $65,000.
If 86,500 pounds of raw materials are needed to meet production in August, how many pounds of raw materials should be purchased in July?
Transcribed Image Text:Required information
[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:
a. The budgeted selling price per unit is $65. Budgeted unit sales for June, July, August, and September are 8,400,
15,000, 17,000, and 18,000 units, respectively. All sales are on credit.
b. Thirty percent of credit sales are collected in the month of the sale and 70% in the following month.
c. The ending finished goods inventory equals 30% of the following month's unit sales.
d. The ending raw materials inventory equals 20% of the following month's raw materials production needs. Each unit of
finished goods requires 5 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 $12 per hour. Each unit of finished goods requires two direct labor-hours.
g. The variable selling and administrative expense per unit sold is $1.60. The fixed selling and administrative expense per
month is $65,000.
5. If 86,500 pounds of raw materials are needed to meet production in August, how many pounds of raw materials should be
purchased in July?
Raw materials to be purchased
175,708 pounds
Transcribed Image Text:Required information
[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:
a. The budgeted selling price per unit is $65. Budgeted unit sales for June, July, August, and September are 8,400,
15,000, 17,000, and 18,000 units, respectively. All sales are on credit.
b. Thirty percent of credit sales are collected in the month of the sale and 70% in the following month.
c. The ending finished goods inventory equals 30% of the following month's unit sales.
d. The ending raw materials inventory equals 20% of the following month's raw materials production needs. Each unit of
finished goods requires 5 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 $12 per hour. Each unit of finished goods requires two direct labor-hours.
g. The variable selling and administrative expense per unit sold is $1.60. The fixed selling and administrative expense per
month is $65,000.
6. If 86,500 pounds of raw materials are needed to meet production in August, what is the estimated cost of raw materials purchases
for July?
Cost of raw materials to be purchased
Definition Definition Summary of all functional budgets such as lower-level budgets, cash flow forecasts, budgeted financial statements, and financial plans of an organization for the upcoming period. A master budget provides the financial information of the company on a periodic basis such as monthly, quarterly, half yearly or annually.
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