Petrini Corporation Makes One Product and It Provided the Following

question 26

Multiple Choice

Petrini 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 $110. Budgeted unit sales for January, February, March, and April are 7,500, 10,600, 12,000, and 11,700 units, respectively. All sales are on credit.
B. Regarding credit sales, 30% are collected in the month of the sale and 70% in the following month.
C. The ending finished goods inventory equals 30% of the following month's 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 $4.00 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 $23.00 per hour. Each unit of finished goods requires 2.6 direct labor-hours.
G. Manufacturing overhead is entirely variable and is $8.00 per direct labor-hour.
H. The variable selling and administrative expense per unit sold is $1.70. The fixed selling and administrative expense per month is $70,000.
The budgeted accounts receivable balance at the end of February is closest to:

• A) $777,000
• B) $1,166,000
• C) $816,200
• D) $349,800

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Definitions:

Gross Margin Ratio

A financial metric that demonstrates the proportion of revenue that exceeds the cost of goods sold, expressed as a percentage.

Net Sales

The total revenue from goods or services sold by a company, after deducting returns, allowances for damaged or missing goods, and discounts.

Cost of Goods Sold

The direct costs attributable to the production of the products sold by a company, including material and labor costs.

Net Income

The total earnings of a company after subtracting all expenses, including taxes and operational costs.