Reference no: EM133031429

Question - Morgantor 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 September are 8,400, 10,000, 12,000, and 13,000 units, respectively. All sales are on credit.

Forty percent of credit sales are collected in the month of the sale and 60% in the following month.

The ending finished goods inventory equals 20% of the following month's unit 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 $2.00 per pound.

Thirty percent of raw materials purchases are paid for in the month of purchase and 70% in the following month.

The direct labor wage rate is $15 per hour. Each unit of finished goods requires two direct labor-hours.

The company treats its overhead as purely variable due to the immateriality of its fixed portion and always uses an estimated predetermined plantwide overhead rate of $10 per direct labor-hour.

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

For the month of July, the company actually produced and sold 15,000 units and incurred the following costs:

Purchased 90,000 pounds of materials at a total cost of $162,000. All of these materials were used in production.

Direct laborers worked a total of 35,000 hours at a rate of $18 per hour.

Total variable manufacturing overhead for the month totaled $320,250.

Based on the facts mentioned above, answer the following questions for the month of July:

a. What is the budgeted gross profit margin of the company?

b. What is the budgeted account receivable turnover of the company?

c. What is the company's expected cash payment for raw materials?

d. What is the labor efficiency variance of Morgantor?

e. What is the variable overhead spending variance of the company?

f. What is the materials price variance of Morgantor?

g. What is the company's budgeted breakeven point is dollars?

h. What is the expected cost of goods sold based on its master budget?

i. What is the budgeted degree of operating leverage by Morgantor?

j. What is the company's budgeted net operating income under variable costing?