Question

CHEC 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 $70. Budgeted unit sales for June July August, and September are 9,100, 22,000, 24,000, and 25,000 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 4 pounds of raw materials. The raw materials cost $2.50 per pound e Forty percent of raw materials purchases are paid for in the month of purchase and 60% in the following month 1 The direct labor wage rate is $12 per hour. Each unit of finished goods requires two direct labor hours g. The variable selling and administrative expense per unit sold is $170. The fixed selling and administrative expense per month is $61,000. 8. If 96.800 pounds of raw materials are needed to meet production in August, what is the estimated accounts payable balance at the end of July? Accounts payable

Answer 1

8) Accounts Payable:
Accounts Payable (96,800 pounds * $2.50 per pound)	$242,000
9) Raw materials inventory balance:
Raw materials inventory balance (96,800*10/100)	9,680
10)
	June	July	August	September
Budgeted sales in units	9,100	22,000	24,000	25,000
Add: Desired ending inventory (20% on next month sales)	4,400	4,800	5,000
Less: Beginning inventory (last month's ending inventory will be the beginning inventory in current month)		4,400	4,800
Total finished goods in units required (a)		22,400	24,200
Direct labor required in hours per unit (b)		2	2
Total hours required (c = a*b)		44,800	48,400
Cost per direct labor hour (d)		$12
Total cost of direct labor in July (c * d)		$537,600