ACCT Ch. 8

1. What are the budgeted sales for July?

Unit sales x selling price per unit = 26,000 x 60 =1,560,000

Morganton Company makes one product and it provided the following information to help prepare the master budget: a. The budgeted selling price per unit is $60. Budgeted unit sales for June, July, August, and September are 9,500, 26,000, 28,000, and 29,000 units, respectively. All sales are on credit. b. Forty percent of credit sales are collected in the month of the sale and 60% in the following month. c. The ending finished goods inventory equals 25% of the following month's unit sales.

d. The ending raw materials inventory equals 15% of the following month's raw materials production needs. Each unit of finished goods requires 4 pounds of raw materials. The raw materials cost $2.40 per pound. e. Forty percent of raw materials purchases are paid for in the month of purchase and 60% in the following month. f. The direct labor wage rate is $12 per hour. Each unit of finished goods requires two direct labor-hours. g. The variable selling and administrative expense per unit sold is $1.50. The fixed selling and administrative expense per month is $65,000.

What is the accounts receivable balance at the end of July?

July sales x percent uncollected 1,560,000 x 0.60 = 936,000 in part b of the prompt it says that 40% of credit sales are collected in the month of July, so the uncollected amount in July would 60%. That's why you multiply July sales x 60% to find the accounts receivable balance at the end of the month.

What are the expected cash collections for July?

Look at b. from the prompt. First find the sales of both June and July. Multiply June sales by 0.60 and July by 0.40 Then add them together. June: 9,500 x 60 = 570,000 July: 26,000 x 60 = 1,560,000 June: 570,000 x 0.60 = 342,000 July: 1,560,000 x 0.40 = 624,000 Add: 342,000 + 624,000 = 966,000 $966,000 is your answer