Answer:
6,000
Explanation:
This question is incomplete. I have given the complete question in addition to my solution below.
If we assume that there is no fixed manufacturing overhead and the variable manufacturing overhead is $10 per direct labor-hour, what is the estimated finished goods inventory balance at the end of July?
Morganton Company makes one product and it provided the following information to help prepare the master budget:
The budgeted selling price per unit is $70. Budgeted unit sales for June, July, August, and September are 9,700, 28,000, 30,000, and 31,000 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 4 pounds of raw materials. The raw materials cost $2.50 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 variable selling and administrative expense per unit sold is $1.70. The fixed selling and administrative expense per month is $67,000.
Variable manufacturing overhead = $10 per direct labor hour
Amount of time required to finish one unit of goods = 2 hours
Direct labor wage rate = $15 per hour
Amount of raw materials required to finish one unit of goods = 4 pounds
Cost of raw materials = $2.50 per pound
Budgeted selling price per unit = $70
Budgeted unit sales for August = 30,000
Therefore, Unit costs = (4*2.50)+(15*2)+(10*2) = $60 per unit
And cost of goods sold = 28,000 * 60 = $1,680,000
(Gross margin) = (70-60)*28,000
= $280,000
The ending finished goods inventory balance for July = 20% of the following month's (August’s) unit sales.
= 0.20 * 30,000 = 6,000
