Required information Skip to question [The following information applies to the questions displayed below.] Morganton Company makes one product and provided the following information to help prepare its master budget: The budgeted selling price per unit is $60. Budgeted unit sales for June, July, August, and September are 8,600, 17,000, 19,000, and 20,000 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 25% 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 $2.40 per pound. Thirty five percent of raw materials purchases are paid for in the month of purchase and 65% 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 $1.80. The fixed selling and administrative expense per month is $67,000. If 96,250 pounds of raw materials are needed to meet production in August, how many pounds of raw materials should be purchased in July?

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter8: Budgeting For Planning And Control

Section: Chapter Questions

Problem 11CE: Shalimar Company manufactures and sells industrial products. For next year, Shalimar has budgeted...

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[The following information applies to the questions displayed below.]

Morganton Company makes one product and provided the following information to help prepare its master budget:

The budgeted selling price per unit is $60. Budgeted unit sales for June, July, August, and September are 8,600, 17,000, 19,000, and 20,000 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 25% 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 $2.40 per pound.
Thirty five percent of raw materials purchases are paid for in the month of purchase and 65% 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 $1.80. The fixed selling and administrative expense per month is $67,000.

If 96,250 pounds of raw materials are needed to meet production in August, how many pounds of raw materials should be purchased in July?

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