Question

Required information [The following information applies to the questions displayed below) Part 15 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 8.200. 12.000, 14,000, and 15,000 units, respectively. All sales are on credit b. 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 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 $2.00 per pound. e. Twenty percent of raw materials purchases are paid for in the month of purchase and 80% in the following month. 1. The direct labor wage rate is $13 per hour. Each unit of finished goods requires two direct labor-hours. The variable selling and administrative expense per unit sold is $1.30. The fixed selling and administrative expense per month is $62.000 9. If 71.000 pounds of raw materials are needed to meet production in August, what is the estimated raw materials inventory balance at the end of July?

Answer 1

Calculation :- It is given that ending Inventory of Raw material in a month will be equal to 10% of following month's raw material Production Needs Raw material Ending Inventory of July = 10% of of Production needs August = - 10% of 71000 7100 pounds August production needs are 71000 pounds So the company will retain 7100 pounds in ending Inventory in July as per Company's