Question

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

Answer 1

Answer:

$93,956

Explanation:

Morganton pays 30% of its raw materials purchases during the current month and the rest (70%) is paid in teh following month.

Raw materials purchases for June = $88,880: $88,880 x 70% = $62,216 paid in July.

Raw materials purchases for July = $105,800: $105,800 x 30% = $31,740

total cash disbursements related to raw materials = $93,956

total cost of raw materials for July

budgeted unit sales 10,000          

- beginning inventory 2,000 units

+ desired inventory 2,400 units (20% of August's requirements)

units produced = 10,400

x 5 pounds of raw materials = 52,000 pounds

- beginning inventory of raw materials 5,200

+ ending inventory of raw materials 6,100 (10% of August's requirements)

total raw materials purchased 52,900 pounds

x $2 per pound                    

total raw materials cost for July $105,800