Morganton Company makes one product and it provided thefollowing information to help prepare the master budget:a. The budgeted selling price per unit is $65. Budgeted unit sales forJune, July, August, and September are 9,000, 21,000, 23,000, and24,000 units, respectively. All sales are on credit.b. Thirty percent of credit sales are collected in the month of the saleand 70% in the following month.c. The ending finished goods inventory equals 30% of the followingmonth's unit sales.d. The ending raw materials inventory equals 20% of the followingmonth's raw materials production needs. Each unit of finishedgoods requires 5 pounds of raw materials. The raw materials cost$2.70 per pound.e. Twenty percent of raw materials purchases are paid for in themonth of purchase and 80% in the following month.f. The direct labor wage rate is $14 per hour. Each unit of finishedgoods 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$60,000.13. If we assume that there is no fixed manufacturing overhead and the variablemanufacturing overhead is $8 per direct labor-hour, what is the estimated cost ofgoods sold and gross margin for July?Estimated cost of goods soldEstimated gross margin

Given in the question: Budgeted Selling Price Per unit $65 Month Sales Units June…

Answered: Estimated cost of goods sold Estimated…

Business

Accounting

Estimated cost of goods sold Estimated gross margin

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

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 9,000, 21,000, 23,000, and
24,000 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
$2.70 per pound.
e. Twenty percent of raw materials purchases are paid for in the
month of purchase and 80% 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
$1.60. The fixed selling and administrative expense per month is
$60,000.
13. If we assume that there is no fixed manufacturing overhead and the variable
manufacturing overhead is $8 per direct labor-hour, what is the estimated cost of
goods sold and gross margin for July?
Estimated cost of goods sold
Estimated gross margin

Expert Solution

Step 1

Given in the question:
Budgeted Selling Price Per unit	$65
Month	Sales Units
June	9000
July	21000
August	23000
September	24000

It has been given in the question that there has no fixed manufacturing overheads and there is only variable manufacturing which is $8 per direct labour hour.

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