ACCT 2402 Introduction to Mangerial Accounting: Fall

Chaper 7

value:

10.

00 points

Foundational 7-1

Morganton Company makes one product and it provided the following information to help prepare the master budget for its four months of operations:

(a)

The budgeted selling price per unit is $65. Budgeted unit sales for June, July, August, and September are 8,400, 15,000, 17,000, and 18,000 units, respectively. All sales are on credit.

(b)

Thirty-percent of credit sales are collected in the month of the sale and 70% in the following month.

(c)

The ending finished goods inventory equals 30% of the following month’s unit sales.

(d)

The ending raw materials inventory equals 20% of the following month’s raw materials production needs. Each unit of finished goods requires 5 pounds of raw materials. The raw materials cost $2.50 per pound.

(e)

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

(f)

The direct labor wage rate is $12 per hour. Each unit of finished goods requires two direct labor-hours.

(g)

The variable selling and administrative expense per unit sold is $1.60. The fixed selling and administrative expense per month is $65,000.

What are the budgeted sales for July?

Budgeted sales	$ [removed]

value: 10.00 points

Foundational 7-2

Morganton Company makes one product and it provided the following information to help prepare the master budget for its four months of operations:

(a)

(b)

(c)The ending finished goods inventory equals 30% of the following month’s unit sales.

(d)

(e)

(f)The direct labor wage rate is $12 per hour. Each unit of finished goods requires two direct labor-hours.

(g)

The budgeted selling price per unit is $65. Budgeted unit sales for June, July, August, and September are 9,900, 30,000, 32,000, and 33,000 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 raw materials inventory equals 20% of the following month’s raw materials production needs. Each unit of finished goods requires 4 pounds of raw materials. The raw materials cost $2.50 per pound.
		Forty-percent of raw materials purchases are paid for in the month of purchase and 60% in the following month.
The variable selling and administrative expense per unit sold is $1.90. The fixed selling and administrative expense per month is $69,000.

What are the expected cash collections for July?

Total cash collections

[removed]

value: 10.00 points

Foundational 7-3

Morganton Company makes one product and it provided the following information to help prepare the master budget for its four months of operations:

(a)

(b)Thirty-percent of credit sales are collected in the month of the sale and 70% in the following month.

(c)

(d)

(e)

(f)

(g)

The budgeted selling price per unit is $60. Budgeted unit sales for June, July, August, and September are 8,600, 17,000, 19,000, and 20,000 units, respectively. All sales are on credit.
		The ending finished goods inventory equals 25% 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 $2.40 per pound.
Thirty five-percent of raw materials purchases are paid for in the month of purchase and 65% in the following month.
		The direct labor wage rate is $14 per hour. Each unit of finished goods requires two direct labor-hours.
The variable selling and administrative expense per unit sold is $1.80. The fixed selling and administrative expense per month is $67,000.

What is the accounts receivable balance at the end of July?

Accounts receivable

4.value: 10.00 points

Foundational 7-4

Morganton Company makes one product and it provided the following information to help prepare the master budget for its four months of operations:

(a)

(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 25% of the following month’s unit sales.

(d)

(e)Forty-percent of raw materials purchases are paid for in the month of purchase and 60% in the following month.(f)The direct labor wage rate is $12 per hour. Each unit of finished goods requires two direct labor-hours.

(g)

	The budgeted selling price per unit is $60. Budgeted unit sales for June, July, August, and September are 9,500, 26,000, 28,000, and 29,000 units, respectively. All sales are on credit.
	The ending raw materials inventory equals 15% of the following month’s raw materials production needs. Each unit of finished goods requires 4 pounds of raw materials. The raw materials cost $2.40 per pound.
	The variable selling and administrative expense per unit sold is $1.50. The fixed selling and administrative expense per month is $65,000.

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

Required production

[removed] units

5.value: 10.00 points

Foundational 7-5

Morganton Company makes one product and it provided the following information to help prepare the master budget for its four months of operations:

(a)

(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 30% of the following month’s unit sales.(d)The ending raw materials inventory equals 20% of the following month’s raw materials production needs. Each unit of finished goods requires 4 pounds of raw materials. The raw materials cost $2.50 per pound.(e)Thirty-percent of raw materials purchases are paid for in the month of purchase and 70% in the following month.(f)The direct labor wage rate is $14 per hour. Each unit of finished goods requires two direct labor-hours.

(g)

The budgeted selling price per unit is $65. Budgeted unit sales for June, July, August, and September are 9,300, 24,000, 26,000, and 27,000 units, respectively. All sales are on credit.

The variable selling and administrative expense per unit sold is $1.90. The fixed selling and administrative expense per month is $63,000.

If 105,200 pounds of raw materials are needed to meet production in August, how many pounds of raw materials should be purchased in July?

Raw materials to be purchased

[removed] pounds

6.value: 10.00 points

Foundational 7-6

Morganton Company makes one product and it provided the following information to help prepare the master budget for its four months of operations: (a)The budgeted selling price per unit is $60. Budgeted unit sales for June, July, August, and September are 9,500, 26,000, 28,000, and 29,000 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 25% of the following month’s unit sales.(d)The ending raw materials inventory equals 15% of the following month’s raw materials production needs. Each unit of finished goods requires 4 pounds of raw materials. The raw materials cost $2.40 per pound.(e)Forty-percent of raw materials purchases are paid for in the month of purchase and 60% in the following month.(f)The direct labor wage rate is $12 per hour. Each unit of finished goods requires two direct labor-hours.(g)The variable selling and administrative expense per unit sold is $1.50. The fixed selling and administrative expense per month is $65,000.

What is the estimated cost of raw materials purchases for July?

Cost of raw material purchases

7.value: 10.00 points

Foundational 7-7

Morganton Company makes one product and it provided the following information to help prepare the master budget for its four months of operations:

(a)

(b)Thirty-percent of credit sales are collected in the month of the sale and 70% in the following month.

(c)

(d)

(e)Thirty-percent of raw materials purchases are paid for in the month of purchase and 70% in the following month.(f)The direct labor wage rate is $14 per hour. Each unit of finished goods requires two direct labor-hours.

(g)

The budgeted selling price per unit is $70. Budgeted unit sales for June, July, August, and September are 8,200, 13,000, 15,000, and 16,000 units, respectively. All sales are on credit.
		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 $2.50 per pound.
The variable selling and administrative expense per unit sold is $1.40. The fixed selling and administrative expense per month is $63,000.

If the cost of raw materials purchases in June is $119,800, what are the estimated cash disbursements for raw materials purchases in July?

Total cash disbursements

$ [removed]

8.value: 10.00 points

Foundational 7-8

Morganton Company makes one product and it provided the following information to help prepare the master budget for its four months of operations:

(a)

(b)Thirty-percent of credit sales are collected in the month of the sale and 70% 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 $2.40 per pound.

(e)

(f)The direct labor wage rate is $12 per hour. Each unit of finished goods requires two direct labor-hours.

(g)

The budgeted selling price per unit is $70. Budgeted unit sales for June, July, August, and September are 8,800, 19,000, 21,000, and 22,000 units, respectively. All sales are on credit.
	Twenty five-percent of raw materials purchases are paid for in the month of purchase and 75% in the following month.
The variable selling and administrative expense per unit sold is $2.00. The fixed selling and administrative expense per month is $69,000.

What is the estimated accounts payable balance at the end of July?

Accounts payable

$ [removed]

9.value: 10.00 points

Foundational 7-9

Morganton Company makes one product and it provided the following information to help prepare the master budget for its four months of operations: (a)The budgeted selling price per unit is $65. Budgeted unit sales for June, July, August, and September are 8,400, 15,000, 17,000, and 18,000 units, respectively. All sales are on credit.(b)Thirty-percent of credit sales are collected in the month of the sale and 70% in the following month.(c)The ending finished goods inventory equals 30% of the following month’s unit sales.(d)The ending raw materials inventory equals 20% of the following month’s raw materials production needs. Each unit of finished goods requires 5 pounds of raw materials. The raw materials cost $2.50 per pound.(e)Thirty-percent of raw materials purchases are paid for in the month of purchase and 70% in the following month.(f)The direct labor wage rate is $12 per hour. Each unit of finished goods requires two direct labor-hours.(g)The variable selling and administrative expense per unit sold is $1.60. The fixed selling and administrative expense per month is $65,000.

What is the estimated raw materials inventory balance at the end of July?

Raw material inventory balance

10.value: 10.00 points

Foundational 7-10

Morganton Company makes one product and it provided the following information to help prepare the master budget for its four months of operations:

(a)

(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)

(g)

	The budgeted selling price per unit is $70. Budgeted unit sales for June, July, August, and September are 9,100, 22,000, 24,000, and 25,000 units, respectively. All sales are on credit.
	The ending raw materials inventory equals 10% of the following month’s raw materials production needs. Each unit of finished goods requires 4 pounds of raw materials. The raw materials cost $2.50 per pound.
	The variable selling and administrative expense per unit sold is $1.70. The fixed selling and administrative expense per month is $61,000.

What is the total estimated direct labor cost for July assuming the direct labor workforce is adjusted to match the hours required to produce the forecasted number of units produced?

$ [removed]

Total direct labor cost

11.

value: 10.00 points

Foundational 7-11

Morganton Company makes one product and it provided the following information to help prepare the master budget for its four months of operations: (a)The budgeted selling price per unit is $70. Budgeted unit sales for June, July, August, and September are 9,100, 22,000, 24,000, and 25,000 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 4 pounds of raw materials. The raw materials cost $2.50 per pound.(e)Forty-percent of raw materials purchases are paid for in the month of purchase and 60% in the following month.(f)The direct labor wage rate is $12 per hour. Each unit of finished goods requires two direct labor-hours.(g)The variable selling and administrative expense per unit sold is $1.70. The fixed selling and administrative expense per month is $61,000.

If the company always uses an estimated predetermined plantwide overhead rate of $12 per direct labor-hour, what is the estimated unit product cost? (Round your answer to 2 decimal places.)

$ [removed]

Unit product cost

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2.value: 10.00 points

Foundational 7-12

Morganton Company makes one product and it provided the following information to help prepare the master budget for its four months of operations:

(a)

(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 25% of the following month’s unit sales.

(d)

(e)Forty-percent of raw materials purchases are paid for in the month of purchase and 60% in the following month.

(f)

(g)

The budgeted selling price per unit is $60. Budgeted unit sales for June, July, August, and September are 8,300, 14,000, 16,000, and 17,000 units, respectively. All sales are on credit.

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.

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

The variable selling and administrative expense per unit sold is $1.50. The fixed selling and administrative expense per month is $64,000.

What is the estimated finished goods inventory balance at the end of July, if the company always uses an estimated predetermined plantwide overhead rate of $6 per direct labor-hour?

$ [removed]

Ending finished goods inventory

13.

value: 10.00 points

Foundational 7-13

Morganton Company makes one product and it provided the following information to help prepare the master budget for its four months of operations:

(a)

(b)Thirty-percent of credit sales are collected in the month of the sale and 70% in the following month.(c)The ending finished goods inventory equals 30% of the following month’s unit sales.

(d)

(e)

(f)The direct labor wage rate is $14 per hour. Each unit of finished goods requires two direct labor-hours.

(g)

The budgeted selling price per unit is $65. Budgeted unit sales for June, July, August, and September are 9,000, 21,000, 23,000, and 24,000 units, respectively. All sales are on credit.

Twenty-percent of raw materials purchases are paid for in the month of purchase and 80% in the following month.

The variable selling and administrative expense per unit sold is $1.60. The fixed selling and administrative expense per month is $60,000.

What is the estimated cost of goods sold and gross margin for July, if the company always uses an estimated predetermined plantwide overhead rate of $8 per direct labor-hour?

$[removed]

Estimated cost of goods sold

Estimated gross margin

14.

value: 10.00 points

Foundational 7-14

Morganton Company makes one product and it provided the following information to help prepare the master budget for its four months of operations:

(a)

(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 $2.50 per pound.(e)Thirty-percent of raw materials purchases are paid for in the month of purchase and 70% in the following month.

(f)

(g)

The budgeted selling price per unit is $60. Budgeted unit sales for June, July, August, and September are 8,900, 20,000, 22,000, and 23,000 units, respectively. All sales are on credit.
	The direct labor wage rate is $13 per hour. Each unit of finished goods requires two direct labor-hours.
The variable selling and administrative expense per unit sold is $1.50. The fixed selling and administrative expense per month is $70,000.

What is the estimated total selling and administrative expense for July?

$ [removed]

Total selling and administrative expenses

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15.

value: 10.00 points

Foundational 7-15

Morganton Company makes one product and it provided the following information to help prepare the master budget for its four months of operations:

(a)

(b)Thirty-percent of credit sales are collected in the month of the sale and 70% in the following month.(c)The ending finished goods inventory equals 30% of the following month’s unit sales.(d)The ending raw materials inventory equals 20% of the following month’s raw materials production needs. Each unit of finished goods requires 4 pounds of raw materials. The raw materials cost $2.50 per pound.(e)Twenty five-percent of raw materials purchases are paid for in the month of purchase and 75% in the following month.(f)The direct labor wage rate is $13 per hour. Each unit of finished goods requires two direct labor-hours.

(g)

The budgeted selling price per unit is $65. Budgeted unit sales for June, July, August, and September are 9,600, 27,000, 29,000, and 30,000 units, respectively. All sales are on credit.

The variable selling and administrative expense per unit sold is $1.60. The fixed selling and administrative expense per month is $66,000.

What is the estimated net operating income for July, if the company always uses an estimated predetermined plantwide overhead rate of $9 per direct labor-hour?

$ [removed]

Net operating income

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