Question

Morganton Company makes one product and it provided the following information to help prepare the master budget: 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. Thirty percent of credit sales 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 unit sales. 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. Twenty five percent of raw materials purchases are paid for in the month of purchase and 75% in the following month. 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 $1.60. The fixed selling and administrative expense per month is $66,000. Required: 1. What are the budgeted sales for July?

Answer 1

Budgeted sales for July = $1,755,000.

Step-by-step explanation:

Sales budget simply shows the expected sales revenue for a forthcoming accounting period. It is simply prepared by showing the quantity expected to be sold multiplied by the unit selling price.

For example, the sales budget for July, for Morganton Company would be

= Units selling price × expected units to be sold

Budgeted sales for July = $65 × 27,000 = $1,755,000.0