0 Required information [The following information applies to the questions displ

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0 Required information [The following information applies to the questions displayed below. Morganton Company makes one product and it provided the following information to help prepare the master budget: a. The budgeted selling price per unit is $60. Budgeted unit sales for June, July, August, and September are 8,000, 11,000, 13,000, and 14,000 units, respectively. All sales are on credit. b. Thirty percent of credit sales are collected in the month of the sale and 70% in the following month. C. The ending finished goods inventory equals 25% 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 $2.20 per pound. e. Twenty percent of raw materials purchases are paid for in the month of purchase and 80% in the following month. f. The direct labor wage rate is $12 per hour. Each unit of finished goods requires two direct labor-hours. g. The variable selling and administrative expense per unit sold is $1.20. The fixed selling and administrative expense per month is $61,000. 9. What is the estimated raw materials inventory balance at the end of July? Raw material inventory balance

Explanation / Answer

9) Raw material inventory balance at the end of july =:

Production needs of august = (13000+14000*25%-13000*25%) = 13250*5 = 66250

Raw material inventory balance at the end of july = 66250*10% = 6625

13) Cost of goods sold per unit = (5*2.2+12*2+) = 35 per unit

Cost of goods sold = 11000*35 = 385000

Gross margin = (60-35)*11000 = 275000

14) Total selling and administrative expense = (11000*1.2+61000) = 74200

15) Net operating income = (275000-74200) = 200800

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