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 four months of operations:

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.

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.

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

Morganton Company makes one product and it provided the following information to help prepare the master budget for its four months of operations:

Explanation / Answer

Calculations of the Cash Collections in July June July August September Sales 8700 18000 20000 21000 Selling Price 65 65 65 65 Total Sales 565500 1170000 1300000 1365000 Cash Collected 226200 468000 520000 546000 Next Month 339300 702000 780000 Total Collections of sales 807300 1222000 1326000 Cash Collection for July from Sales would be $807,300

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