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Petrini Corporation Makes One Product and It Provided the Following

question 71

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 sales for February is closest to:

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Definitions:

Boers

Descendants of the Dutch-speaking settlers of the Cape Colony in southern Africa during the 17th and 18th centuries, known for their role in the Boer Wars against British rule.

Republic of the Transvaal

A historical 19th-century Boer state in Southern Africa that gained independence from the United Kingdom in 1852 until its annexation after the Second Boer War.

Orange Free State

A historical Boer state in southern Africa that existed from 1854 to 1902, becoming a British colony thereafter.

Suez Canal

A man-made waterway in Egypt, opened in 1869, connecting the Mediterranean Sea to the Red Sea, significantly reducing travel time for maritime trade between Europe and Asia.