Luchini Corporation Makes One Product and It Provided the Following

question 102

Multiple Choice

Luchini 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 $111. Budgeted unit sales for April, May, June, and July are 7,100, 10,100, 13,300, and 14,000 units, respectively. All sales are on credit.
B. Regarding credit sales, 40% are collected in the month of the sale and 60% in the following month.
C.The ending finished goods inventory equals 10% 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 5 pounds of raw materials. The raw materials cost $5.00 per pound.
E. Regarding raw materials purchases, 40% are paid for in the month of purchase and 60% in the following month.
F. The direct labor wage rate is $18.00 per hour. Each unit of finished goods requires 2.9 direct labor-hours.
G. Variable manufacturing overhead is $7.00 per direct labor-hour. Fixed manufacturing overhead is zero.
The budgeted accounts receivable balance at the end of May is closest to:

• A) $747,000
• B) $448,440
• C) $672,660
• D) $1,121,100

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Definitions:

Price Level

An all-encompassing average of the present prices in the economy for goods and services.

Nominal Variable

A variable measured in terms of monetary value that has not been adjusted for inflation, reflecting the current price levels.

Velocity of Money

The rate at which money circulates in the economy, typically measured as the ratio of GDP to a country's total supply of money.

Real GDP

An economic metric that quantifies the value of all finished goods and services produced within a country's borders in a specific time period, corrected for changes in price or inflation.