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
Chapter7: Budgeting
Section: Chapter Questions
Problem 3PB: TIB makes custom guitars and prepared the following sales budget for the second quarter It also has...
Related questions
Concept explainers
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
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 1 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Principles of Accounting Volume 2
Accounting
ISBN:
9781947172609
Author:
OpenStax
Publisher:
OpenStax College
Managerial Accounting
Accounting
ISBN:
9781337912020
Author:
Carl Warren, Ph.d. Cma William B. Tayler
Publisher:
South-Western College Pub
Financial And Managerial Accounting
Accounting
ISBN:
9781337902663
Author:
WARREN, Carl S.
Publisher:
Cengage Learning,
Principles of Accounting Volume 2
Accounting
ISBN:
9781947172609
Author:
OpenStax
Publisher:
OpenStax College
Managerial Accounting
Accounting
ISBN:
9781337912020
Author:
Carl Warren, Ph.d. Cma William B. Tayler
Publisher:
South-Western College Pub
Financial And Managerial Accounting
Accounting
ISBN:
9781337902663
Author:
WARREN, Carl S.
Publisher:
Cengage Learning,
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:
9781337514835
Author:
MOYER
Publisher:
CENGAGE LEARNING - CONSIGNMENT
Cornerstones of Cost Management (Cornerstones Ser…
Accounting
ISBN:
9781305970663
Author:
Don R. Hansen, Maryanne M. Mowen
Publisher:
Cengage Learning
Principles of Cost Accounting
Accounting
ISBN:
9781305087408
Author:
Edward J. Vanderbeck, Maria R. Mitchell
Publisher:
Cengage Learning