Reference no: EM132984266

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

Budgeted selling price per unit $ 97 Budgeted unit sales (all on credit):

January 10,000

February 12,000

March 13,300

April 15,200

Raw materials requirement per unit of output 4 pounds

Raw materials cost $ 1.00 per pound

Direct labor requirement per unit of output 2.5 direct labor-hours

Direct labor wage rate $ 23.00 per direct labor-hour

Predetermined overhead rate (all variable) $ 9.00 per direct labor-hour

Variable selling and administrative expense $ 3.10 per unit sold

Fixed selling and administrative expense $ 70,000 per month

Credit sales are collected:

30% in the month of the sale

70% in the following month

Raw materials purchases are paid:

30% in the month of purchase

70% in the following month

The ending finished goods inventory should equal 30% of the following month's sales. The ending raw materials inventory should equal 10% of the following month's raw materials production needs.

Problem 1: The budgeted sales for February is closest to:

Option 1: $1,290,100

Option 2: $1,474,400

Option 3: $1,164,000

Option 4: $970,000