Reference no: EM131267792
Morganton Company makes one product and it provided the following information to help prepare the master budget for its first 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, respectively. All sales are on credit.
b. Forty-percent of credit sales are collected in the month of the sale nd 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 cost $2.00 per pound.
e. Thirty-percent of raw materials purchases are paid for in the month of purchse and 70% in the following month.
Why is the beginning inventory amount for June, 0, when calculating the units to be produced in June if budgeting assumption c. states that the ending finished goods inventory should be .2 of the next month's unit sales which means the starting finished goods inventory should be 1680(8400 x .2). Why must I use 0 for the beginning inventory in calculating the units to be produced in June?
Also, why does the cost of raw materials to be purchased in June include subtracting a beginning inventory of 12760 if when calculating the units to be produced in June involves having a 0 beginning finished goods inventory. Where does the Beginning raw materials amount of 12760 for June come from?
|
Cost basis of the remaining reserves at end of second year
: Herberger Oil & Gas Company paid $10 million for the drilling rights to a 1,000 acre tract of land near Midland, Texas. What is the cost basis of the remaining reserves at the end of the second year?
|
|
Calculate the depreciation expense recorded on the machine
: On January 1, 2002, Top Flight Company purchased a machine for $68,000. The estimated life of the machine was 5 years, and the estimated salvage value was $5,000. Assume the company employs the sum-of-the-years-digits' method of depreciation. Calcula..
|
|
Calculate amount of net income-weighted average method
: ABC Company employs a periodic inventory system and sells its inventory to customers for $20 per unit. ABC Company had the following inventory information available for the month of May: Calculate the amount of net income reported on ABC Company's in..
|
|
Equipment will be depreciated using the straight-line method
: On June 1, 2004, XYZ Company paid $360,000 to purchase land, building, and equipment. The market value of these assets on that date were: land $90,000; building $260,000; equipment $50,000. The equipment will be depreciated using the straight-line me..
|
|
Prepare master budget for first four months of operations
: Morganton Company makes one product and it provided the following information to help prepare the master budget for its first four months of operations: The budgeted selling price per unit is $70. Budgeted unit sales for June, July, August, and Septe..
|
|
In preparing an amortization table
: In preparing an amortization table, it is necessary to include:
|
|
New debt service fund transactions
: On the advice of the city attorney, a City Jail Debt Service Fund is opened to account for debt service transactions related to the bond issue sold on January 1, 2015. Prepare and post an entry closing all nominal accounts to Fund Balance. Assume any..
|
|
Why does Dana need to understand cost behavior
: Ink Shots, Inc., is a new business located in upstate New York. It prints promotional flyers for local businesses and distributes them at public places or area events. The flyers are either placed on the windshield of cars in parking lots or distribu..
|
|
Prepare entry closing all nominal accounts to fund balance
: The City Hall Debt Service Fund of the City of Monroe has been open for five years; it was created to service an $16,000,000, 3 percent tax-supported bond issue. As of December 31, 2014, this serial bond issue had a balance of $12,000,000. The fisca..
|