The Foundational 15 [LO8-2, LO8-3, LO8-4, LO8-5, LO8-7, LO8-9,LO8-10]

[The following information applies to the questionsdisplayed below.]

Morganton Company makes one product and it provided thefollowing information to help prepare the master budget:

a. The budgeted selling price per unit is $65. Budgeted unitsales for June, July, August, and September are 8,700, 18,000,20,000, and 21,000 units, respectively. All sales are oncredit.

b. Forty percent of credit sales are collected in the month ofthe sale and 60% in the following month.

c. The ending finished goods inventory equals 30% of thefollowing month’s unit sales.

d. The ending raw materials inventory equals 20% of thefollowing month’s raw materials production needs. Each unit offinished goods requires 5 pounds of raw materials. The rawmaterials cost $2.00 per pound.

e. Forty percent of raw materials purchases are paid for in themonth of purchase and 60% in the following month.

f. The direct labor wage rate is $15 per hour. Each unit offinished goods requires two direct labor-hours.

g. The variable selling and administrative expense per unit soldis $1.90. The fixed selling and administrative expense per month is$68,000.

1. If 101,500 pounds of raw materials are needed to meetproduction in August, what is the estimated cost of raw materialspurchases for July?

2. In July what are the total estimated cash disbursements forraw materials purchases? Assume the cost of raw material purchasesin June is $129,120.

3. What is the total estimated direct labor cost for Julyassuming the direct labor workforce is adjusted to match the hoursrequired to produce the forecasted number of units produced?

4. What is the estimated total selling and administrativeexpense for July?