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: 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. Thirty percent of credit sales are collected in the month of the sale and 70% in the following month. The ending finished goods inventory equals 20% of the following month’s unit sales. 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.

Twenty five percent of raw materials purchases are paid for in the month of purchase and 75% in the following month.

The direct labor wage rate is $12 per hour. Each unit of finished goods requires two direct labor-hours. The variable selling and administrative expense per unit sold is $2.00. The fixed selling and administrative expense per month is $69,000.

8. What is the estimated accounts payable balance at the end of July?

9. What is the estimated raw materials inventory balance 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 we assume that there is no fixed manufacturing overhead and the variable manufacturing overhead is $10 per direct labor-hour, what is the estimated unit product cost? (Round your answer to 2 decimal places.)

Explanation / Answer

Req 8. Estimated Accounts payable balance at end of July: 70% sales of July month (19000 units @ 70*70%) 931000 Req 9. Production of July and Aug: July Aug Sep Sales 19000 21000 22000 Add: Ending Invevntory 4200 4400 Less: begininig Inventory 3800 4200 Budgeted Production 19400 21200 Purchase: Budgeted production 19400 21200 Raw material per unit 5 5 Total production nedd 97000 106000 Add: Desired Ending Inventory 10600 Less: Beginning Ending Inventory 9700 Raw Material Purchase unit 97900 Cost er unit 2.4 Raw material cost in $ 234960 Accounts payable at end of July (234960*75%): 176220 Req 10. Estimated Labour cost in July: Production in July 19400 Hours required per unit 2 Labour hours required 38800 labour rate per hour 12 Labour cost in $ 465600 Req 11 Unit product cost: material (5 pounds @2.40) 12 labour (2 horus @12) 24 variable OH (2 hours @10) 20 Unit product cost 56

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