Questions 1-15 (of 17) [The following information applies to the questions displ
ID: 2552183 • Letter: Q
Question
Questions 1-15 (of 17) [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 for its first four months of operations a. The budgeted selling price per unit is $70. Budgeted unit sales for June, July. August, and September are 8.400, 10,000,12,000, and 13,000 unts, 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. c. The ending finished goods inventory equals 20% of the following month's unit sales d The ending taw materials inventory equals 10% of the following month's raw matenais production needs Each unit of finished goods requires 5 pounds of raw materials. The raw materials cost $2.00 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 $15 per hour. Each unit of finished goods requires two direct labor-hours 9 The variable selling and administrative expense per unit sold is $1.80. The fixed selling and administrative expenise per month Is $60,000 10.00 points Type here to search 5 6 7 9 WE RExplanation / Answer
Primary Working
June
July
August
September
Budgeted Unit Sales
8400
10000
12000
13000
Add: Desired Finished Goods Ending Inventory (20% of following month's sale)
2000
2400
2600
Total Needs
10400
12400
14600
Less: Beginning finished goods inventory (Ending inventory of last month)
1680
2000
2400
Budgeted Production in units
8720
10400
12200
Required Raw material per unit in pound
5
5
5
Total Required Raw Materials in pound
43600
52000
61000
Add: Desired Raw Material Ending Inventory (10% of following month's raw material production)
5200
6100
Total Needs
48800
58100
Less: Beginning Raw Material Inventory
4360
5200
Total Raw materials requirement in units
44440
52900
Part 9 – Estimated Raw materials inventory balance (in dollars at the end of July) = Raw material Inventory at end of July 6100 Pounds x Cost per pound $2 = $12,200
Part 10 – Total Estimated Direct Labor Cost for July = Total Production Units of July Month x Requirement of Direct labor hours per unit x Direct Labor Rate per hour
= 10,400 Units x 2 hours per unit x $15 per hour
= $312,000
Part 11 --- Estimated Unit Product Cost
Unit Cost
Direct Labor Cost per unit (5 pound x $2)
$10
Direct Labor Cost per unit (2 hours x $15)
$30
Manufacturing Overhead Applied (2 hours x $10)
$20
Unit Product Cost
$60
Part 12 – Finished Goods Inventory balance at the end of July = Units of Finished Goods Inventory Ending in July 2400 Units x Unit Product Cost as calculated in Part 11 i.e. $60
= 2400*$60
= $144,000
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June
July
August
September
Budgeted Unit Sales
8400
10000
12000
13000
Add: Desired Finished Goods Ending Inventory (20% of following month's sale)
2000
2400
2600
Total Needs
10400
12400
14600
Less: Beginning finished goods inventory (Ending inventory of last month)
1680
2000
2400
Budgeted Production in units
8720
10400
12200
Required Raw material per unit in pound
5
5
5
Total Required Raw Materials in pound
43600
52000
61000
Add: Desired Raw Material Ending Inventory (10% of following month's raw material production)
5200
6100
Total Needs
48800
58100
Less: Beginning Raw Material Inventory
4360
5200
Total Raw materials requirement in units
44440
52900
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