Questions 12-16 are based on the following. Mercury Company makes one product and it provided the following information to help prepare the master budget for its first four months of operations: • The budgeted selling price per unit is $70. Budgeted unit sales for June, July, August, and September are 8,200, 13,000, 15,000, and 16,000 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 20% of the following month's unit sales. • 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 $2.50 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 $14 per hour. Each unit of finished goods requires two direct labor-hours. • The variable selling and administrative expense per unit sold is $1.40. The fixed selling and administrative expense per month is $63,000. What is the estimated accounts payable at the end of July? $120,275 $118,825 $118,000 $119,800
Questions 12-16 are based on the following. Mercury Company makes one product and it provided the following information to help prepare the master budget for its first four months of operations: • The budgeted selling price per unit is $70. Budgeted unit sales for June, July, August, and September are 8,200, 13,000, 15,000, and 16,000 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 20% of the following month's unit sales. • 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 $2.50 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 $14 per hour. Each unit of finished goods requires two direct labor-hours. • The variable selling and administrative expense per unit sold is $1.40. The fixed selling and administrative expense per month is $63,000. What is the estimated accounts payable at the end of July? $120,275 $118,825 $118,000 $119,800
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:Questions 12-16 are based on the following. Mercury Company makes one product and it provided the following
information to help prepare the master budget for its first four months of operations:
• The budgeted selling price per unit is $70. Budgeted unit sales for June, July, August, and September are 8,200,
13,000, 15,000, and 16,000 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 20% of the following month's unit sales.
• 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 $2.50 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 $14 per hour. Each unit of finished goods requires two direct labor-hours.
• The variable selling and administrative expense per unit sold is $1.40. The fixed selling and administrative expense
per month is $63,000.
What is the estimated accounts payable at the end of July?
$120,275
$118,825
$118,000
$119,800
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