Cost Accounting Difficult Question

Question

Morganton Company makes one product and it provided the following information to help prepare the master budget for its first four months of operations:

a. The budgeted selling price per unit is $70. Budgeted unit sales for June, July, August, and September are 8,800, 19,000, 21,000, and 22,000 units, respectively. All sales are on credit.
b. Thirty percent of credit sales are collected in the month of the sale and 70% in the following month.
c. The ending finished goods inventory equals 20% of the following month’s unit sales.
d. The ending raw materials inventory equals 10% of the following month’s raw materials production needs. Each unit of finished goods requires 5 pounds of raw materials. The raw materials cost $2.40 per pound.
e. Twenty five percent of raw materials purchases are paid for in the month of purchase and 75% in the following month.
f. The direct labor wage rate is $12 per hour. Each unit of finished goods requires two direct labor-hours.
g. The variable selling and administrative expense per unit sold is $2.00. The fixed selling and administrative expense per month is $69,000.







1.
value:
10.00 points




15. What is the estimated net operating income for July, if the company always uses an estimated predetermined plantwide overhead rate of $10 per direct labor-hour?





My work: I got $573,600 but it was marked wrong.

Answer 1

1, Calculate Morganton's July Net Operating Income or Loss Statement :

        Gross Revenue,

        Cost of Goods Sold,

        July fixed Selling/Admin Expense $69,000     

        Direct Labor Wage Expense,

        Net Operating Income (Loss) 

 

 

2, Use the following :

       19,000 Finished Units sold in July,

       $70/Sales Price Per Unit Sold,

       Variable Cost $2/Per Unit Sold,

       Raw Materials Cost: $2.40*5/Per Finished unit sold in July,

       July fixed Selling/Admin Expense $69,000,

       Direct Labor Wage Expense: 2hrs/Per Unit/$10/hr