Determine the estimated finished goods inventory balance

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Reference no: EM133257

Question :

Morganton Company manufactures one product and it provided the subsequent information to help create the master budget for its four months of operations:

(a) 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, correspondingly. All sales are on credit.

(b) 40 % of credit sales are collected in the month of the sale and 60 percent in the subsequent month.

(d) The ending raw materials inventory equals 10% of the subsequent month's raw materials production needs. Each unit of finished goods needs 5 pounds of raw materials. The raw materials cost $2.00 per pound.

(e) 30 % of raw materials purchases are paid for in the month of purchase and 70% in the given month.

(f) The direct labor wage rate is $15 per hour. Every unit of finished goods needs two direct labor-hours.

(g) The variable administrative and selling expense per unit sold is $1.80. The fixed administrative and selling expense per month is $60,000.

Determine the estimated finished goods inventory balance at the end of July, if the company always uses an estimated predetermined plant wide overhead rate of $10 per direct labor-hour?

Reference no: EM133257

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