Luchini Corporation Makes One Product and It Provided the Following

question 192

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 66,850 pounds of raw materials are required for production in June,then the budgeted raw material purchases for May is closest to:

• A) 52,100 pounds
• B) 72,155 pounds
• C) 87,785 pounds
• D) 56,525 pounds

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Definitions:

Optimal Extraction Level

The most efficient point at which a resource can be extracted or harvested to balance usage and sustainability over time.

Reduction

The process or result of making something smaller or less in amount, degree, or size, often used in context of costs, prices, or quantities.

Extraction Costs

The expenses associated with the removal of natural resources from the earth, such as mining or drilling.

Price of Resource

The cost associated with securing a natural or economic resource for use in production or consumption.