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 $70. Budgeted unit sales for June, July, August, and September are 8,800, 19,000, 21,000, and 22,000 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 20% of the following month's unit sales. d. The ending raw materials inventory equals 10% of the following month's raw materials production needs. Each unit of finished goods requires 5 pounds of raw materials. The raw materials cost $2.40 per pound. e. Twenty five percent of raw materials purchases are paid for in the month of purchase and 75% 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 $2.00. The fixed selling and administrative expense per month is $69,000. Foundational 8-6 (Algo) 6. If 106,000 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
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 $70. Budgeted unit sales for June, July, August, and September are 8,800, 19,000, 21,000, and 22,000 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 20% of the following month's unit sales. d. The ending raw materials inventory equals 10% of the following month's raw materials production needs. Each unit of finished goods requires 5 pounds of raw materials. The raw materials cost $2.40 per pound. e. Twenty five percent of raw materials purchases are paid for in the month of purchase and 75% 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 $2.00. The fixed selling and administrative expense per month is $69,000. Foundational 8-6 (Algo) 6. If 106,000 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
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text: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 $70. Budgeted unit sales for June, July, August, and September are 8,800,
19,000, 21,000, and 22,000 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 20% of the following month's unit sales.
d. The ending raw materials inventory equals 10% of the following month's raw materials production needs. Each unit of
finished goods requires 5 pounds of raw materials. The raw materials cost $2.40 per pound.
e. Twenty five percent of raw materials purchases are paid for in the month of purchase and 75% 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 $2.00. The fixed selling and administrative expense per
month is $69,000.
Foundational 8-6 (Algo)
6. If 106,000 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
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