Michard Corporation Makes One Product and It Provided the Following

question 52

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.
-If 54,480 pounds of raw materials are required for production in June,then the budgeted cost of raw material purchases for May is closest to:

• A) $148,752
• B) $89,280
• C) $121,968
• D) $95,184

---

Definitions:

Wheel Cylinders

Hydraulic cylinders in a drum brake system, responsible for applying force to the brake shoes when the brake pedal is pressed.

Hydraulic System

A technology in which fluid is used to move energy from one location to another, often used in machinery to perform work.

Double-Wall Steel

A construction method using two layers of steel to provide added strength, insulation, or protection against leaks or external damage.

Copper Clad

A material or board that is coated with a layer of copper, often used in the manufacturing of printed circuit boards (PCBs).