You received no credit for this question in the previous attempt. Required infor

Question

You received no credit for this question in the previous attempt. Required information The Foundational 15 [LO8-2, LO8-3, LO8-4, LO8-5, LO8-7, LO8-9, LO8-10] [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 $70. Budgeted unit sales for June, July, August, and September are 8,800, 19,000, 21,000, and 22,000 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 20% 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 $2.40 per pound. e. Twenty five percent of raw materials purchases are paid for in the month of purchase and 75% 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 $2.00. The fixed selling and administrative expense per month is $69,000. Foundational 8-4 4. According to the production budget, how many units should be produced in July? 21,440 units ired produ 4 5 6 ", 15 |of 15 Next >

Explanation / Answer

Working note

·         The production for the month is calculated by formula below

Production for the month = sales for the month + ending inventory of finished goods – opening inventory of the finished goods or closing inventory of previous month

·         The raw material purchase is calculated as follows

Raw material purchase for the months = raw material required for production for the month + ending raw material inventory required for the month – opening raw material inventory or previous month raw material inventory

8.4 (ans)

The production required for the month of july is 19,400 units ( as shown in master budget given above)

Production for July = sales of july + ending inventory of FG of july – opening balance of FG inventory july or closing balnce of ending FG inventory of june

= 19000 + 4200 - 3800

= 19400 units

8.5

If 106,000 pounds of raw material are needed for production in august , the pounds of raw material should be purchased in july is 97,900 pounds ( as shown in master budget given above)

Raw material purchased in july = Raw material required for production in July – ending inventory of raw material in july – closing balance of raw material inventory in june

= 97,000 + 10,600 – 9700

= 97,900 pounds of raw material to be purchased in july

8.6

The estimated cost of raw material purchases in july is $234,960

Cost of purchase of raw material in july = purchase units is july x rate per pound

= 97,000 x $2.4

=$234,960

8.7

The cash disbursements for raw material purchase for the month of July is $164,004 ( as shown in master budget above)

Cash disbursement in month of july for raw material purchase = 75% amount paid for raw material purchase in june + 25% amount paid for july raw material purchases

= $105,264 + $58,740

=$164,004

8.9

The estimated raw material inventory balance of end of july is 10,600 pounds ( 10% of raw material required for production in august which is 106,000)

8.12

The estimated FG inventory balance of end of july is 4200 units ( 20% of sales required in august which is 21,000 units)

master budget particulars June June July August September october units rate amount units rate amount units rate amount units rate amount units rate amount units rate amount sales 8800 70 616000 19000 70 1330000 21000 70 1470000 22000 70 1540000 0 collections 30% in month of sales 184800 399000 441000 462000 70% next month 431200 931000 1029000 1078000 Ending finished goods inventory 20% units of next month sales 1760 3800 4200 4400 0 production of Finished goods 10840 19400 21200 17600 0 Raw material required for production 54200 97000 106000 88000 0 Ending raw material inventory 10% of next month raw material needed for production 5420 9700 10600 8800 0 0 purchases of raw material for the month 58480 2.4 140352 97900 2.4 234960 104200 2.4 250080 79200 2.4 190080 0 Purchase cost of raw material 25% paid in the month of purchase 35088 58740 62520 47520 75% paid in next month 105264 176220 187560 142560 cash disburesment purchase cost for the month 35088 164004 238740 235080 142560

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