Reference no: EM132984271

Petrini Corporation makes one product and it provided the following information to help prepare the master budget for the next four months of operations:The budgeted selling price per unit is $110. Budgeted unit sales for January, February, March, and April are 7,500, 10,600, 12,000, and 11,700 units, respectively. All sales are on credit.

Regarding credit sales, 30% are collected in the month of the sale and 70% in the following month.

• The ending finished goods inventory equals 30% of the following month's sales.
• 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 $4.00 per pound.
• Regarding raw materials purchases, 40% are paid for in the month of purchase and 60% in the following month.
• The direct labor wage rate is $23.00 per hour. Each unit of finished goods requires 2.6 direct labor-hours.
• Manufacturing overhead is entirely variable and is $8.00 per direct labor-hour.
• The variable selling and administrative expense per unit sold is $1.70. The fixed selling and administrative expense per month is $70,000.

Problem 1: The expected cash collections for February is closest to:

Option 1: $825,000

Option 2: $349,800

Option 3: $927,300

Option 4: $577,500