FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Morganton Company makes one product and it provided the following information to help prepare the
- The budgeted selling price per unit is $70. Budgeted unit sales for June, July, August, and September are 8,400, 10,000, 12,000, and 13,000 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 pounds of raw materials. The raw materials cost $2.00 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 $15 per hour. Each unit of finished goods requires two direct labor-hours.
- The variable selling and administrative expense per unit sold is $1.80. The fixed selling and administrative expense per month is $60,000.
Foundational 8-8 (Static)
8. If 61,000 pounds of raw materials are needed to meet production in August, what is the estimated accounts payable balance at the end of July?
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