Luchini Corporation Makes One Product and It Provided the Following

question 201

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.
-The budgeted accounts receivable balance at the end of May is closest to:

• A) $747,000
• B) $448,440
• C) $672,660
• D) $1,121,100

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Definitions:

Marginal Revenue

The additional income earned by selling one more unit of a product.

Average Total Cost

The total cost of production (fixed plus variable costs) divided by the total quantity produced, typically graphed to analyze cost behaviors over varying output levels.

Average Total Cost

The total cost of production divided by the number of units produced, representing the cost per unit of output.

Marginal Revenue

The boost in income from the sale of an additional unit of a product or service.