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:

Question

Quizplus · Accepted Answer

The budgeted required production for May is computed as follows:
 11eacbfc_c5f0_2bfa_8ffe_51043a046c46_TB7552_00 *June sales of 13,300 units × 10% = 1,330 units
**May sales of 10,100 units × 10% = 1,010 units
The budgeted raw material purchases for May are computed as follows:
 11eacbfc_c5f0_2bfb_8ffe_b37b77720417_TB7552_00 * 66,850 pounds × 30% = 20,055 pounds.
**52,100 pounds × 30% = 15,630 pounds.

Luchini Corporation Makes One Product and It Provided the Following