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zysi [14]
3 years ago
10

Morganton Company makes one product and it provided the following information to help prepare the master budget: The budgeted se

lling 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. 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 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 $2.40 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 $12 per hour. Each unit of finished goods requires two direct labor-hours. The variable selling and administrative expense per unit sold is $2.00. The fixed selling and administrative expense per month is $69,000. 13. 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 cost of goods sold and gross margin for July?
Business
1 answer:
pishuonlain [190]3 years ago
3 0

Answer:

Estimated cost of goods sold $ 3,964,800

Gross Margin $ 991,200

Explanation:

Estimated sales units and sales revenue

June                                                 8,800 units

July                                                 19,000 units

August                                            21,000 units

September                                     22,000 units

Total estimated sales                    70,800 units

Sales price per unit                             $ 70

Total Sales Revenue $ 70 * 70,800 units = $ 4,956,000

Computation of cost of goods sold

Direct Material  

5 pounds * 70,800 units * $ 2.40 per pound                                  $ 849,600

Direct Labor

2 labor hours * 70,800 units * $ 12 per hour                                 $ 1,699,200

Variable Manufacturing Overhead

$ 10 * 70,800 units * 2 labor hours                                                <u>$ 1,416,000</u>

Cost of goods sold                                                                          $3,964,800

Computation  of gross margin

Sales Revenue                                                                               $ 4,956,000

Cost of goods sold                                                                        <u>$ 3, 964,800</u>

Gross Margin                                                                                 $     991,200

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