Luchini Corporation Makes One Product and It Provided the Following

question 116

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.
If the budgeted cost of raw materials purchases in April is $207,650 and in May is $282,625, then in May the total budgeted cash disbursements for raw materials purchases is closest to:

• A) $124,590
• B) $237,640
• C) $169,575
• D) $113,050

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Definitions:

Word-of-Mouth

The informal exchange of information between individuals about the merits of products, services, or events.

Formal Channels

These are officially established and structured paths for communication or information flow within an organization.

Tangible Assets

Physical and material assets that have intrinsic value, such as machinery, buildings, and inventory.

Intangible Assets

Non-physical assets that have value, such as patents, trademarks, copyright, and goodwill.