Asked by Tommy Grias on May 12, 2024
Verified
Michard Corporation makes one product and it provided the following information to help prepare the master budget for the next four months of operations:The budgeted selling price per unit is $125. Budgeted unit sales for April, May, June, and July are 7,600, 10,500, 13,800, and 12,900 units, respectively. All sales are on credit.Regarding credit sales, 20% are collected in the month of the sale and 80% in the following month.The ending finished goods inventory equals 20% of the following month's sales.The ending raw materials inventory equals 30% of the following month's raw materials production needs. Each unit of finished goods requires 4 pounds of raw materials. The raw materials cost $2.00 per pound.Regarding raw materials purchases, 30% are paid for in the month of purchase and 70% in the following month.The direct labor wage rate is $25.00 per hour. Each unit of finished goods requires 3.0 direct labor-hours.The variable selling and administrative expense per unit sold is $3.40. The fixed selling and administrative expense per month is $80,000.The estimated selling and administrative expense for May is closest to:
A) $115,700
B) $80,000
C) $77,130
D) $35,700
Master Budget
A comprehensive financial planning document that combines several individual budgets within a company, forecasting overall financial activities.
Credit Sales
Sales for which payment is not received at the time of transaction but is postponed to a future date, often involving terms of credit.
Finished Goods Inventory
The completed products that are ready for sale but have not yet been sold.
- Calculate budgeted selling and administrative expenses.
Verified Answer
Learning Objectives
- Calculate budgeted selling and administrative expenses.
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