Michard Corporation Makes One Product and It Provided the Following

question 17

Multiple Choice

Michard Corporation makes one product and it provided the following information to help prepare the master budget for the next four months of operations: a. 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.
B. Regarding credit sales, 20% are collected in the month of the sale and 80% in the following month.
C. The ending finished goods inventory equals 20% of the following month's sales.
D. 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.
E. Regarding raw materials purchases, 30% are paid for in the month of purchase and 70% in the following month.
F. The direct labor wage rate is $25.00 per hour. Each unit of finished goods requires 3.0 direct labor-hours.
G.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:

• A) $1,725,000
• B) $950,000
• C) $1,312,500
• D) $1,612,500

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Definitions:

S&P 500 Index

An American stock market index based on the market capitalizations of 500 large companies having common stock listed on the NYSE or NASDAQ.

June Contract

A June contract refers to a futures contract or an options contract that expires in the month of June.

Marking To Market

This refers to the daily adjustment of accounts to reflect profits and losses in the value of securities.

Option Contract

A financial contract that gives the buyer the right, but not the obligation, to buy or sell an asset at a specified price on or before a specified date.