Tsosie 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 $103. Budgeted unit sales for April, May, June, and July are 9,300, 11,300, 9,800, and 12,800 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 10% of the following month’s sales.
- The ending raw materials inventory equals 10% of the following month’s raw materials production needs. Each unit of finished goods requires 2 pounds of raw materials. The raw materials cost $4.00 per pound.
- Regarding raw materials purchases, 10% are paid for in the month of purchase and 90% in the following month.
- The direct labor wage rate is $20.00 per hour. Each unit of finished goods requires 2.7 direct labor hours.
- The variable selling and administrative expense per unit sold is $3.70. The fixed selling and administrative expense per month is $80,000
Required:
- What are the budgeted sales for May?
- What are the expected cash collections for May?
- What is the budgeted accounts receivable balance at the end of May
- According to the production budget, how many units should be produced in May?
- If 20,200 pounds of raw materials are needed for production in June, how many pounds of raw materials should be purchased in May?
- What is the estimated cost of raw materials purchases for May?
- If the cost of raw material purchases in April is $77,320, then in May what are the total estimated cash disbursements for raw materials purchases?
- What is the estimated accounts payable balance at the end of May?
- What is the estimated raw materials inventory balance at the end of May?
- What is the total estimated direct labor cost for May assuming the direct labor workforce is adjusted to match the hours required to produce the forecasted number of units produced?
- For simplicity, we will assume that there is no fixed manufacturing overhead and that the variable manufacturing overhead is $11.00 per direct labor-hour. What is the estimated unit product cost?
- What is the estimated finished goods inventory balance at the end of May?
- What is the estimated cost of goods sold and gross margin for May
- What is the estimated total selling and administrative expense for May
- What is the estimated net operating income for May?
