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:

a. The budgeted selling price per unit is $65. Budgeted unit sales for June, July, August, and September are 8,700, 18,000, 20,000, and 21,000 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 5 pounds of raw materials. The raw materials cost $2.00 per pound.

e. Forty percent of raw materials purchases are paid for in the month of purchase and 60% in the following month.

f. The direct labor wage rate is $15 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 $68,000.

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

Explanation / Answer

9. Jun Jul Aug Material Needed for production 5 5 5 Total Material Needed 70500 93000 101500 add: desired ending inventory 20% 18600 20300 14700 Total July Raw Material Inventory (Pound) 20300 Cost per Pound 2 Total July Raw Material Inventory ($) 40600 10. Production Budget July Expected units to be sold 18000 add: desired ending inventory 6000 Total Units available for sale 24000 Less: Beginning invenory 5400 Production Needed 18600 Per unit Hours needed 2 Total Hours Needed 37200 Per Hour Cost 15 Total Direct Labor Cost 558000 11. Estimated unit product Cost: Quantity/Hours Per Q/H Total Per Unit Direct Material 5 2 10 Direct Labor 2 15 30 Manufacturing Overhead 2 8 16 Unit Product Cost 56 12. Ending Finished Goods Inventory (Units) 30% of August Sale 20000*30% 6000 Unit Product Cost 56 Ending Finished Goods Inventory ($) 336000

Related Questions

Navigate

• Browse (All)
• Browse M
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.