Mumbower Corporation Makes One Product and Has Provided the Following

question 202

Essay

Mumbower Corporation makes one product and has provided the following information to help prepare the master budget for the next four months of operations: Credit sales are collected:
40% in the month of the sale
60% in the following month
Raw materials purchases are paid:
40% in the month of purchase
60% in the following month

The ending finished goods inventory should equal 20% of the following month's sales.The ending raw materials inventory should equal 40% of the following month's raw materials production needs.

Required:
a.What are the budgeted sales for November?
b.What are the expected cash collections for November?
c.What is the budgeted accounts receivable balance at the end of November?
d.According to the production budget, how many units should be produced in November?
e.If 40,000 pounds of raw materials are needed for production in December, how many pounds of raw materials should be purchased in November?
f.What is the estimated cost of raw materials purchases for November?
g.If the cost of raw material purchases in October is $201,040, then in November what are the total estimated cash disbursements for raw materials purchases?
h.What is the estimated accounts payable balance at the end of November?
i.What is the estimated raw materials inventory balance at the end of November?
j.What is the total estimated direct labor cost for November assuming the direct labor workforce is adjusted to match the hours required to produce the forecasted number of units produced?
k.For simplicity, we will assume that there is no fixed manufacturing overhead and that the variable manufacturing overhead is $7.00 per direct labor-hour.What is the estimated unit product cost?
l.What is the estimated finished goods inventory balance at the end of November?
m.What is the estimated cost of goods sold and gross margin for November?
n.What is the estimated total selling and administrative expense for November?
o.What is the estimated net operating income for November?

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Definitions:

Inbound Materials

Raw materials or goods that are being received by a facility from suppliers for the purpose of production or resale.

Finished Goods

Products that have completed the manufacturing process and are ready to be sold or distributed to customers.

Seasonal Stocks

Inventories that are built up in anticipation of predictable changes in demand that occur at certain times of the year.

EOQ

Economic Order Quantity is a formula used by businesses to determine the ideal order quantity that minimizes inventory costs including holding, shortage, and order costs.