Reference no: EM132521974

Michard Corporation makes one product and it provided the following information to help prepare the master budget for the next four months of operations:

1. The budgeted selling price per unit is $125. Budgeted unit sales for April, May, June, and July are 7,600, 10,500, 13,800, and 12,900 units, respectively. All sales are on credit.
2. Regarding credit sales, 20% are collected in the month of the sale and 80% in the following month.
3. The ending finished goods inventory equals 20% of the following month's sales.
4. The ending raw materials inventory equals 30% of the following month's raw materials production needs. Each unit of finished goods requires 4 pounds of raw materials. The raw materials cost $2.00 per pound.
5. Regarding raw materials purchases, 30% are paid for in the month of purchase and 70% in the following month.
6. The direct labor wage rate is $25.00 per hour. Each unit of finished goods requires 3.0 direct labor-hours.
7. The variable selling and administrative expense per unit sold is $3.40. The fixed selling and administrative expense per month is $80,000.

Question 1: If 54,480 pounds of raw materials are required for production in June, then the budgeted raw material purchases for May is closest to:

Multiple Choice

Option 1: 74,376 pounds

Option 2: 44,640 pounds

Option 3: 47,592 pounds

Option 4: 60,984 pounds