Morganton Company makes one product and it provided the following information to

Question

Morganton 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 $65. Budgeted unit sales for June, July, August, and September are 9,300, 24,000, 26,000, and 27,000 units, respectively. All sales are on credit.

Forty percent of credit sales are collected in the month of the sale and 60% in the following month.

The ending raw materials inventory equals 20% of the following month’s raw materials production needs. Each unit of finished goods requires 4 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 $1.90. The fixed selling and administrative expense per month is $63,000

What is the estimated raw materials inventory balance (in dollars) at the end of July? Raw material inventory balance.

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? Total estimated direct labor cost.

If the company always uses an estimated predetermined plantwide overhead rate of $9 per direct labor-hour, what is the estimated unit product cost? (Round your answer to 2 decimal places.) Unit product cost.

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 $9 per direct labor-hour? Ending finished goods inventory.

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

Explanation / Answer

Solution 9:

Estimated ending raw material inventory for July (In pound) = Estimated production of August * 4 * *20%

= 26300 * 4* 20% = 21040 pound

Estimated raw materials inventory balance (in dollars) at the end of July = 21040 * $2.50 = $52,600

Solution 10:

Solution 11:

Solution 12:

Production budget for July - Morganton Company Particulars July August Budgeted sales units 24000 26000 Add: Desired ending inventory (30% of following month sale) 7800 8100 Less: Beginning inventory 7200 7800 Production units 24600 26300

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