Question

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 $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. f. The direct labor wage rate is $13 per hour. Each unit of finished goods requires two direct labor-hours. g. The variable selling and administrative expense per unit sold is $1.30. The fixed selling and administrative expense per month is $62,000. 5. If 71,000 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

Answer 1

	Particulars			June	July	August	September
	Sales			8200	12000	14000	15000
Add:	Desired Ending Inventory			2400	2800	3000
Less:	Beginning Inventory			0	2400	2800
	Production Required				12400	14200
	R.M req per unit of F.G				5	5
	Pounds of R.M required				62000	71000
Add:	Desired Ending R.M inventory				7100
Less:	Beginning R.M inventory				6200
	Purchase Required		(pounds)		62900

Is this correct?