Michard Corporation makes one product and it provided the following information
ID: 2578108 • Letter: M
Question
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 budgeted sales for May is closest to:
Multiple Choice
$1,725,000
$950,000
$1,612,500
$1,312,500
Explanation / Answer
Answer:-Budgeted sales for the month of May =Budgeted units sales of may month*selling price per unit
=10500 units *$125 per unit = $1312500
The budgeted sales for may closest to $1312500.