In: Accounting
Lahser Corp. produces component parts for durable medical
equipment manufacturers. The controller is building a master budget
for the first quarter of the upcoming calendar year. Selected
information from the accounting records is presented next:
a. Accounts Receivable as of January 1 are $59,200. Selling price
per unit is projected to remain stable at $11 per unit throughout
the budget period. Sales for the first six months of the upcoming
year are budgeted to be as follows:
January | $99,100 |
February | $110,500 |
March | $111,500 |
April | $107,500 |
May | $103,000 |
June | $121,400 |
b. Sales are 20% cash and 80% credit. All credit sales are
collected in the month following the sale.
c. Lahser Corp. has a policy that states that each month’s ending
inventory of finished goods should be 10% of the following month’s
sales (in units).
d. Three pounds of direct material is needed per unit at $2.30 per
pound. Ending inventory of direct materials should be 20% of next
month’s production needs.
e. Monthly manufacturing overhead costs are $5,650 for factory
rent, $2,900 for other fixed manufacturing costs, and $1.10 per
unit produced for variable manufacturing overhead. All costs are
paid in the month in which they are incurred.
4. What is the budgeted direct materials cost for the first quarter? (1 point)