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.
If 41,920 pounds of raw materials are required for production in September, then the budgeted raw material purchases for August is closest to:
▸ 57,056 pounds
▸ 44,480 pounds
▸ 43,712 pounds
▸ 70,400 pounds
Quick Reply
