Compute what is the estimated unit product cost

Assignment Help Accounting Basics

Reference no: EM132726751

Morganton Company makes one product and it provided the following information to help prepare the master budget only for July:

a. The budgeted selling price per unit is $70. Budgeted unit sales for June, July, August, and September are 10,000, 12,000 14,000, and 13,000 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 70% in the following month.

f. The direct labor wage rate is $15 per hour. Each unit of finished goods requires two direct labor-hours.

g. The variable selling and administrative expense per unit sold is $1.80. The fixed selling and administrative expense per month is $62,000.

Question 1. What is the total estimated direct labor cost for July assuming the direct labor workforce is adjusted to match the hours required to produce the forecasted number of units produced?

Required production in units ....................................

Direct labor hours per unit ........................................

Total direct labor-hours needed (a) ...........................

Direct labor cost per hour (b)....................................

Total direct labor cost (a) × (b) .................................

Question 2. If the company always uses an estimated predetermined plant-wide overhead rate of $10 per direct labor-hour, what is the estimated unit product cost?

Direct materials.......................................

Direct labor .............................................

Manufacturing overhead.........................

Unit product cost.....................................

Question 3. What is the estimated finished goods inventory balance at the end of July?

Ending finished goods inventory in units (a)......................................

Unit product cost (b)...........................................................................

Ending finished goods inventory (a) × (b)..........................................

Reference no: EM132726751

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