Morganton Company makes one product, and has provided the following information to help prepare the master budget
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Question:
Morganton Company makes one product, and has provided the following information to help prepare the master budget for its first four months of operations:
- The budgeted selling price per unit is $60. Budgeted unit sales for June, July, August, and September are 8,900, 20,000, 22,000, and 23,000 units, respectively. All sales are on credit.
- Forty percent of credit sales are collected in the month of the sale and 60% in the following month.
- The ending finished goods inventory equals 20% of the following month's unit sales.
- The ending raw materials inventory equals 10% of the following month's raw materials production needs. Each unit of finished goods requires 5 kilograms of raw materials. The raw materials cost $2.50 per kilogram.
- Thirty percent of raw materials purchases are paid for in the month of purchase and 70% in the following month.
- The direct labour wage rate is $13 per hour. Each unit of finished goods requires two direct labour-hours.
- The variable selling and administrative expense per unit sold is $1.50. The fixed selling and administrative expense per month is $70,000.
2. What are the expected cash collections for July?
Related Book For
Introduction to Managerial Accounting
ISBN: 978-0078025792
7th edition
Authors: Peter Brewer, Ray Garrison, Eric Noreen
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