The Foundational 15 LO82 LO83 LO84 LO85 LO87 LO89 LO810 The

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 $65. Budgeted unit sales for June, July, August, and September are 9,000, 21,000, 23,000, and 24,000 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 30% of the following month\'s unit sales d. 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 e. Twenty percent of raw materials purchases are paid for in the month of purchase and f. The direct labor wage rate is $14 per hour. Each unit of finished goods requires two direct g. The variable selling and administrative expense per unit sold is $1.60. The fixed selling raw materials cost $2.70 per pound 80% in the following month labor-hours and administrative expense per month is $60,000 1. What are the budgeted sales for July? Budgeted sales 3. What is the accounts receivable balance at the end of July? Accounts receivable 5. If 116,500 pounds of raw materials are needed to meet production in August, how many pounds of raw materials should be purchased in July? Raw materials to be purchased pounds 7. In July what are the total estimated cash disbursements for raw materials purchases? Assume the cost of raw material purchases in June is $194,400 Total cash disbursements

Solution

Req 1: Sales units 21000 Selling price per unit 65 Budgeted Sales in July 1365000 Req 3: Accounts receivable Balance in July July sales (1365000*70%) 955500 Req 5. July Production Sales budgetd 21000 Add: Desired ending inventory 6900 Total needs 27900 Less: Desired Beginning Inventory 6300 July production 21300 Raw material required per unit 5 Total Production needs 106500 Add: Ending invnetory 23300 Total needs 129800 Less: Beginning Inventory 21300 Raw material purhchasse in pounds 108500 Req 7: Cash disbursement in July: June purchases (194400*80%) 155,520 July Purchases (108500*2.70*20%) 58,590 Total cash disbursement 214,110