(Please explain each answer) thank you! Morganton Company makes one product and
ID: 2420377 • Letter: #
Question
(Please explain each answer) thank you!
Morganton Company makes one product and it provided the following information to help prepare the master budget for its first four months of operations:
a. The budgeted selling price per unit is $70. Budgeted unit sales for June, July, August, and September are 8,500, 16,000, 18,000, and 19,000 units, respectively. All sales are on credit.
b. Forty percent of credit sales are collected in the month of the sale and 60% 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 $2.00 per pound.
e. Thirty percent of raw materials purchases are paid for in the month of purchase and 70% in the following month.
f. The direct labor wage rate is $13 per hour. Each unit of finished goods requires two direct labor-hours.
g. The variable selling and administrative expense per unit sold is $1.70. The fixed selling and administrative expense per month is $66,000.
7. If the cost of raw material purchases in June is $106,400, what are the estimated cash disbursements for raw materials purchases in July?
8. What is the estimated accounts payable balance at the end of July?
9. What is the estimated raw materials inventory balance (in dollars) at the end of July?
10. What is the total estimated direct labor cost for July assuming the direct labor workforce is adjusted to match the hours required to produce the forecasted number of units produced?
11. If the company always uses an estimated predetermined plantwide overhead rate of $8 per direct labor-hour, what is the estimated unit product cost? (Round your answer to 2 decimal places.)
12. What is the estimated finished goods inventory balance at the end of July, if the company always uses an estimated predetermined plantwide overhead rate of $8 per direct labor-hour?
Ending finished goods inventory
13. What is the estimated cost of goods sold and gross margin for July, if the company always uses an estimated predetermined plantwide overhead rate of $8 per direct labor-hour?
Estimated cost of goods sold =
Estimated gross margin =
14. What is the estimated total selling and administrative expense for July?
Total estimated selling and administrative expenses =
15. What is the estimated net operating income for July, if the company always uses an estimated predetermined plantwide overhead rate of $8 per direct labor-hour?
Net operating income =
Explanation / Answer
Working Notes:
Answers:
7) the estimated cash disbursements for raw materials purchases in July = $165800
8) estimated accounts payable balance at the end of July = $81242
9. the estimated raw materials inventory balance (in dollars) at the end of July – 9100 x $2 = $18200
10. the total estimated direct labor cost for July assuming the direct labor workforce is adjusted to match the hours required to produce the forecasted number of units produced - $426400
11. If the company always uses an estimated predetermined plantwide overhead rate of $8 per direct labor-hour, the estimated unit product cost - $52 per unit
12. estimated finished goods inventory balance at the end of July, if the company always uses an estimated predetermined plantwide overhead rate of $8 per direct labor-hour = 3600 unis @ 52 per unit = $187200
13. Estimated cost of goods sold = $832000 and Estimated gross margin = $288000
14. Total estimated selling and administrative expenses = $93200
15. Net operating income = $194800
Budgeted sales and collection from sales Particulars June July August September Budgeted sales in units 8500 16000 18000 19000 Selling price per unit ($) 70 70 70 70 Budgeted sales ($) 595000 1120000 1260000 1330000 Collection of sales ($): June 238000 357000 July 448000 672000 August 252000 756000 September 532000 Total Collection ($) 238000 805000 924000 1288000 Budgeted unit of production, raw material purchase and disbursement of purchase price Month June July August September Budgeted sales in units 8500 16000 18000 19000 Add: Ending finished goods inventory (20% of the following months unit sales) 3200 3600 3800 Total 19600 21800 Less: beginning inventory 3200 3600 Number of units produced 16400 18200 Raw material per unit (pound) 5 5 Raw material required for production (pounds) 82000 91000 Add: Ending raw material (pounds) (10% of the following month requirement) 8200 9100 0 Total requirement (pounds) 91100 91000 Less: beginning inventory 8200 9100 Raw material purchase (units) 53200 82900 81900 Cost Raw material per pound ($) 2 2 2 Purchase price of raw materials ($) 106400 165800 163800 Payment for raw material June July August June 31920 116060 July 49740 81242 August 114660 Disbursement ($) 31920 165800 195902 Direct labour Budget Month July August September Number of units produced 16400 18200 15200 Direct labour hour per unit 2 2 2 Total direct labour hours required 32800 36400 30400 Cost of direct labour per hour ($) 13 13 13 Total direct labour cost($) 426400 473200 395200 Variable selling and administrative expense budget June July August September Budgeted sales in units 8500 16000 18000 19000 variable selling and administrative expense per unit sold ($) 1.7 1.7 1.7 1.7 Total expense ($) 14450 27200 30600 32300 Direct material per unit ($2 /pound x 5pound) 10 Direct labour per unit (2 hours @$13 per hour) 26 Overhead (2 hours @ $8 per hour) 16 Product cost per unit ($) 52 Sales ($) 1120000 Less: cost of goods sold (16000 units @ $52) 832000 Gross Profit 288000 Less: Operating expenses Variable selling and administrative expenses 27200 fixed selling and administrative expense per month 66000 93200 Net Margin 194800Related Questions
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