Answer:
1. What is the accounts receivable balance at the end of July?
2. 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?
3. 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?
- COGS July = 19,000 x $46 = $874,000
- gross profit July = $456,000
4. What is the estimated total selling and administrative expense for July?
5. 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 net operating income for July?
Explanation:
budgeted selling price per unit $70
budgeted unit sales:
June July August September
units $$$ units $$$ units $$$ units $$$
8,800 $616 19,000 $1,330 21,000 $1,470 22,000 $1,540
$184.8 $431.2
$399 (from July) <u>$931</u>
$441 $1,029
$462
ending finished goods inventory:
June July August September
units $$$ units $$$ units $$$ units $$$
3,800 4,200 4,400
variable manufacturing overhead per unit = $10 x 2 = $20
direct materials per unit = $12
direct labor per unit = $24
total cost per unit = $56
total ending goods inventory for July = $46 x 4,200 units = $235,200
Revenue July = 19,000 x $70 = $1,330,000
COGS July = 19,000 x $46 = $874,000
gross profit = $456,000
variable S&A expense = $2.00
fixed S&A expense = $69,000
total S&A expense for July = (19,000 x $2) + $69,000 = $107,000
estimated net operating income July = gross margin - S&A = $456,000 - $107,000 = $349,000
