Michard Corporation Makes One Product and It Provided the Following

question 11

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 estimated selling and administrative expense for May is closest to:

• A) $115,700
• B) $80,000
• C) $77,130
• D) $35,700

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Definitions:

Profit-Maximizing

A strategy focused on increasing a firm's earnings to its highest possible level.

Unregulated

Describes activities or sectors not controlled or governed by rules set by authorities or regulatory bodies.

Profit-Maximizing

A strategy in business where a firm seeks to achieve the highest possible profit.

Monopolist

An individual or company that is the sole provider of a particular product or service in the market, giving them significant control over prices and market conditions.