5. If 66,250 pounds of raw materials are needed to meet production in August, the pounds of raw materials purchased in July is <u>58,375 pounds</u>.
6. If 66,250 pounds of raw materials are needed to meet production in August, the estimated cost of raw materials purchases for July is <u>$128,425</u>.
7. In July, the total estimated cash disbursements for raw materials purchases is <u>$105,105</u>.
8. If 66,250 pounds of raw materials are needed to meet production in August, the estimated accounts payable balance at the end of July is <u>$102,740</u> ($128,425 x 80%).
9. If 66,250 pounds of raw materials are needed to meet production in August, the estimated raw materials inventory balance at the end of July is <u>6,625 pounds</u>.
10. The total estimated direct labor cost for July is <u>$276,000</u>.
11. If we assume that there is no fixed manufacturing overhead and the variable manufacturing overhead is $7 per direct labor hour, the estimated unit product cost? (Round your answer to 2 decimal places.)
Cost of raw materials per unit = $11 (5 x $2.20)
The estimated unit product cost under the above scenario is <u>$18</u> ($11 +$7).
12. If we assume that there is no fixed manufacturing overhead and the variable manufacturing overhead is $7 per direct labor hour, the estimated finished goods inventory balance at the end of July is <u>$58,500</u> (3,250 x $18).
13. If we assume that there is no fixed manufacturing overhead and the variable manufacturing overhead is $7 per direct labor hour, the estimated cost of goods sold and gross margin for July are as follows:
Estimated cost of goods sold = <u>$198,000</u> (11,000 x $18)
Gross margin = $462,000 ($660,000 - $198,000)
14. The estimated total selling and administrative expense for July is <u>$74,200</u> ($13,200 + $61,000).
15. If we assume that there is no fixed manufacturing overhead and the variable manufacturing overhead is $7 per direct labor hour, the estimated net operating income for July is <u>$387,800</u> ($462,000 - $74,200).
<h3>Data and Calculations:</h3>
Budgeted selling price per unit = $60
<h3>Sales Revenue Budget:</h3>
June July August September
Budgeted unit sales 8,000 11,000 13,000 14,000
Budgeted sales revenue $480,000 $660,000 $780,000 $840,000
<h3>Cash Collections:</h3>
30% month of sale $144,000 $198,000 $234,000 $252,000
70% following month 336,000 462,000 546,000
<h3>Production Budget:</h3>
June July August September
Budgeted unit sales 8,000 11,000 13,000 14,000
Ending inventory (25%) 2,750 3,250 3,500
Units available for sale 10,750 14,250 16,500
Beginning inventory 2,000 2,750 3,250 3,500
Production units 8,750 11,500 13,250
<h3>Materials Purchase Budget:</h3>
June July August
Production units 8,750 11,500 13,250
Materials requirements 43,750 57,500 66,250 (13,250x5)
Ending inventory 5,750 6,625
Production materials available 49,500 64,125
Beginning inventory 4,375 5,750 6,625
Purchase of materials 45,125 58,375
Purchase costs $99,275 $128,425
<h3>Payment for Purchase of Materials:</h3>
20%, month of purchase $19,855 $25,685
80% following month $79,420
Cash disbursements $105,105
<h3>Direct Labor Budget:</h3>
June July August
Production units 8,750 11,500 13,250
Direct labor-hours required 17,500 23,000 26,500
Direct labor costs ($12/hr.) $210,000 $276,000 $318,000
Budgeted unit sales 8,000 11,000 13,000
<h3>Overhead Budget:</h3>
Variable selling and
administrative expense $9,600 $13,200 $15,600
Fixed selling and admin. exp. 61,000 61,000 61,000
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