Morganton Company makes one product and it provided the following information to help prepare the master budget:
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Question:
Morganton Company makes one product and it provided the following information to help prepare the master budget:
- The budgeted selling price per unit is $65. Budgeted unit sales for June, July, August, and September are 8,400, 15,000, 17,000, and 18,000 units, respectively. All sales are on credit.
- Thirty percent of credit sales are collected in the month of the sale and 70% in the following month.
- The ending finished goods inventory equals 30% of the following month's unit sales.
- The ending raw materials inventory equals 20% of the following month's raw materials production needs. Each unit of finished goods requires 5 pounds of raw materials. The raw materials cost $2.50 per pound.
- Thirty percent of raw materials purchases are paid for in the month of purchase and 70% in the following month.
- The direct labor wage rate is $12 per hour. Each unit of finished goods requires two direct labor-hours.
- The variable selling and administrative expense per unit sold is $1.60. The fixed selling and administrative expense per month is $65,000.
7. In July what are the total estimated cash disbursements for raw materials purchases? Assume the cost of raw material purchases in June is $142,800; and $86,500 pounds of raw materials are needed to meet production in August.
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