Reference no: EM132610779

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 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.

Required:

Question 1. Discuss some of the major benefits to be gained from budgeting. Support your answer with suitable example?

Question 2. What are the budgeted sales for July?

Question 3. What are the expected cash collections for July?

Question 4. What are the accounts receivable balance at the end of July?

Question 5. According to the production budget, how many units should be produced in July?