Sleeter Corporation Makes One Product and It Provided the Following

question 216

Multiple Choice

Sleeter Corporation makes one product and it provided the following information to help prepare the master budget for the next four months of operations:
A.Budgeted unit sales for April,May,June,and July are 7,500,11,900,10,800,and 14,800 units,respectively.All sales are on credit.
B.The ending finished goods inventory equals 30% of the following month's sales.
C.The ending raw materials inventory equals 30% of the following month's raw materials production needs.Each unit of finished goods requires 6 pounds of raw materials.The raw materials cost $5.00 per pound.
If 72,000 pounds of raw materials are required for production in June,then the budgeted cost of raw material purchases for May is closest to:

• A) $559,230
• B) $455,100
• C) $350,970
• D) $347,100

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Definitions:

Contribution Format

A type of income statement format that separates variable costs from fixed costs to highlight the contribution margin.

Break-even Point

The financial point at which total revenue exactly matches total costs; neither profit nor loss is realized.

Dollar Sales

The total revenue generated from the sale of goods or services, expressed in monetary units.

Contribution Margin Ratio

A financial indicator demonstrating the proportion of sales income that is not absorbed by variable expenses, hence aiding in the coverage of fixed costs.