Required information The following information applies to th

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 8.600, 17,000, 19,000, and 20,000 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 $2.40 per pound. e. Thirty five percent of raw materials purchases are paid for in the month of purchase and 65% in the following month f. The direct labor wage rate is $14 per hour. Each unit of finished goods requires two direct labor-hours. g. The variable selling and administrative expense per unit sold is $1.80. The fixed selling and administrative expense per month is $67,000 8. What is the estimated accounts payable balance at the end of July? Answer is complete but not entirely correct Accounts payable 136,500 8

Solution

Merchandise Production Budget July August Sales In units      17,000.00    19,000.00 Add: Ending Inventory in units -25% X 19,000        4,750.00      5,000.00 Total Needs      21,750.00    24,000.00 Less: Beginning Inventory in units - 25% X 17,000      (4,250.00)    (4,750.00) Required Units Produced      17,500.00    19,250.00 Direct Material Budget July August Required Units Produced      17,500.00    19,250.00 Raw Material required per Unit in pounds                 5.00              5.00 Total Raw Material Required      87,500.00    96,250.00 Add: Ending Inventory - 96,250 pounds X 10%        9,625.00 Total Needs      97,125.00 Less: Beginning Inventory - 87,500 Pounds X 10%      (8,750.00) Total Raw Material Purchased      88,375.00 Cost per pound - Raw Material                 2.40 Cost of Raw Material Purchased    212,100.00 Estimated Accounts Payable at the End of July = $212,100 X 65% Estimated Accounts Payable at the End of July = $137,865