Morganton Company makes one product and it provided the following information to
ID: 2431838 • Letter: M
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.
a.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.
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 30% of the following month’s unit sales. d.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.
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 $14 per hour. Each unit of finished goods requires two direct labor-hours.
g.The variable selling and administrative expense per unit sold is $1.90. The fixed selling and administrative expense per month is $63,000.
12 1000 points value: 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 $9 per direct labor-hour? Ending finished goods inventoryExplanation / Answer
Ans 12 Finished goods inventory Particulars June July Aug Closing stock (30% of next months sales) 7200 7800 8100 (+26000*.30) Per unit cost Material (2.5*4) 10 Labour'(2*14) 28 OH 9 Cost per unit 47 Total value of nventory at the end of july 366600 (47*7800) Ans 13 Cost of poods sold for july Sale (24000*65) 1560000 Less: COGS (24000*47) 1128000 Gross margin 432000 Ans 14 Selling and adminis expenses Variable (24000*1.90) 45600 Fixed 63000 Total 108600 Answer Net operating income Gross profit 432000 Less: Sellinng and admin 108600 Net income 323400
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