Biology Forums - Study Force

Sevenbergen Corporation makes one product and has provided the following information to help prepare the master budget for the next four months of operations:

Budgeted selling price per unit	$ 92
Budgeted unit sales (all on credit):
July	9,000
August	11,300
September	10,400
October	10,800

Raw materials requirement per unit of output	4	pounds
Raw materials cost	$ 1.00	per pound
Direct labor requirement per unit of output	2.8	direct labor-hours
Direct labor wage rate	$ 22.00	per direct labor-hour
Variable selling and administrative expense	$ 1.50	per unit sold
Fixed selling and administrative expense	$ 70,000	per month

Credit sales are collected:

40% in the month of the sale

60% in the following month

Raw materials purchases are paid:

30% in the month of purchase

70% in the following month

The ending finished goods inventory should equal 20% of the following month's sales. The ending raw materials inventory should equal 30% of the following month’s raw materials production needs.

The estimated selling and administrative expense for August is closest to:

▸ $70,000

▸ $57,970

▸ $16,950

▸ $86,950

Content hidden