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Finance Case Study – Hedging Currency Risks At AIFS

Finance Case Study – Hedging Currency Risks At AIFS

Morganton Company makes one product and it provided the following information to help prepare the master budget for its four months of operations:

 

(a) The budgeted selling price per unit is $65. Budgeted unit sales for June, July, August, and September are 8,400, 15,000, 17,000, and 18,000 units, respectively. All sales are on credit.
(b) Thirty-percent of credit sales are collected in the month of the sale and 70% in the following month.
(c) The ending finished goods inventory equals 30% of the following month’s unit sales.
(d) The ending raw materials inventory equals 20% of the following month’s raw materials production needs. Each unit of finished goods requires 5 pounds of raw materials. The raw materials cost $2.50 per pound.
(e) Thirty-percent of raw materials purchases are paid for in the month of purchase and 70% in the following month.
(f) The direct labor wage rate is $12 per hour. Each unit of finished goods requires two direct labor-hours.
(g) The variable selling and administrative expense per unit sold is $1.60. The fixed selling and administrative expense per month is $65,000.

 

What are the budgeted sales for July?

 

  Budgeted sales $ [removed]

 

 

2.

value:
10.00 points

 

Foundational 7-2

Morganton Company makes one product and it provided the following information to help prepare the master budget for its four months of operations:

 

(a) The budgeted selling price per unit is $65. Budgeted unit sales for June, July, August, and September are 9,900, 30,000, 32,000, and 33,000 units, respectively. All sales are on credit.
(b) Forty-percent of credit sales are collected in the month of the sale and 60% in the following month.
(c) The ending finished goods inventory equals 30% of the following month’s unit sales.
(d) The ending raw materials inventory equals 20% of the following month’s raw materials production needs. Each unit of finished goods requires 4 pounds of raw materials. The raw materials cost $2.50 per pound.
(e) Forty-percent of raw materials purchases are paid for in the month of purchase and 60% in the following month.
(f) The direct labor wage rate is $12 per hour. Each unit of finished goods requires two direct labor-hours.
(g) The variable selling and administrative expense per unit sold is $1.90. The fixed selling and administrative expense per month is $69,000.

 

What are the expected cash collections for July?

 

  Total cash collections $ [removed]

 

 

3.

value:
10.00 points

 

Foundational 7-3

Morganton Company makes one product and it provided the following information to help prepare the master budget for its four months of operations:

 

(a) The budgeted selling price per unit is $60. Budgeted unit sales for June, July, August, and September are 8,600, 17,000, 19,000, and 20,000 units, respectively. All sales are on credit.
(b) Thirty-percent of credit sales are collected in the month of the sale and 70% in the following month.
(c) The ending finished goods inventory equals 25% of the following month’s unit sales.
(d) The ending raw materials inventory equals 10% of the following month’s raw materials production needs. Each unit of finished goods requires 5 pounds of raw materials. The raw materials cost $2.40 per pound.
(e) Thirty five-percent of raw materials purchases are paid for in the month of purchase and 65% in the following month.
(f) The direct labor wage rate is $14 per hour. Each unit of finished goods requires two direct labor-hours.
(g) The variable selling and administrative expense per unit sold is $1.80. The fixed selling and administrative expense per month is $67,000.

 

What is the accounts receivable balance at the end of July?

 

  Accounts receivable $

 

 

4.

value:
10.00 points

 

Foundational 7-4

Morganton Company makes one product and it provided the following information to help prepare the master budget for its four months of operations:

 

(a) The budgeted selling price per unit is $60. Budgeted unit sales for June, July, August, and September are 9,500, 26,000, 28,000, and 29,000 units, respectively. All sales are on credit.
(b) Forty-percent of credit sales are collected in the month of the sale and 60% in the following month.
(c) The ending finished goods inventory equals 25% of the following month’s unit sales.
(d) The ending raw materials inventory equals 15% of the following month’s raw materials production needs. Each unit of finished goods requires 4 pounds of raw materials. The raw materials cost $2.40 per pound.
(e) Forty-percent of raw materials purchases are paid for in the month of purchase and 60% in the following month.
(f) The direct labor wage rate is $12 per hour. Each unit of finished goods requires two direct labor-hours.
(g) The variable selling and administrative expense per unit sold is $1.50. The fixed selling and administrative expense per month is $65,000.

 

According to the production budget, how many units should be produced in July?

 

  Required production [removed] units

 

 

5.

value:
10.00 points

 

Foundational 7-5

Morganton Company makes one product and it provided the following information to help prepare the master budget for its four months of operations:

 

(a) The budgeted selling price per unit is $65. Budgeted unit sales for June, July, August, and September are 9,300, 24,000, 26,000, and 27,000 units, respectively. All sales are on credit.
(b) Forty-percent of credit sales are collected in the month of the sale and 60% in the following month.
(c) The ending finished goods inventory equals 30% of the following month’s unit sales.
(d) The ending raw materials inventory equals 20% of the following month’s raw materials production needs. Each unit of finished goods requires 4 pounds of raw materials. The raw materials cost $2.50 per pound.
(e) Thirty-percent of raw materials purchases are paid for in the month of purchase and 70% in the following month.
(f) The direct labor wage rate is $14 per hour. Each unit of finished goods requires two direct labor-hours.
(g) The variable selling and administrative expense per unit sold is $1.90. The fixed selling and administrative expense per month is $63,000.

 

If 105,200 pounds of raw materials are needed to meet production in August, how many pounds of raw materials should be purchased in July?

 

  Raw materials to be purchased [removed]  pounds

 

 

6.

value:
10.00 points

 

Foundational 7-6

Morganton Company makes one product and it provided the following information to help prepare the master budget for its four months of operations:

 

(a) The budgeted selling price per unit is $60. Budgeted unit sales for June, July, August, and September are 9,500, 26,000, 28,000, and 29,000 units, respectively. All sales are on credit.
(b) Forty-percent of credit sales are collected in the month of the sale and 60% in the following month.
(c) The ending finished goods inventory equals 25% of the following month’s unit sales.
(d) The ending raw materials inventory equals 15% of the following month’s raw materials production needs. Each unit of finished goods requires 4 pounds of raw materials. The raw materials cost $2.40 per pound.
(e) Forty-percent of raw materials purchases are paid for in the month of purchase and 60% in the following month.
(f) The direct labor wage rate is $12 per hour. Each unit of finished goods requires two direct labor-hours.
(g) The variable selling and administrative expense per unit sold is $1.50. The fixed selling and administrative expense per month is $65,000.

 

What is the estimated cost of raw materials purchases for July?

 

  Cost of raw material purchases $

 

 

7.

value:
10.00 points

 

Foundational 7-7

Morganton Company makes one product and it provided the following information to help prepare the master budget for its four months of operations:

 

(a) The budgeted selling price per unit is $70. Budgeted unit sales for June, July, August, and September are 8,200, 13,000, 15,000, and 16,000 units, respectively. All sales are on credit.
(b) Thirty-percent of credit sales are collected in the month of the sale and 70% in the following month.
(c) The ending finished goods inventory equals 20% of the following month’s unit sales.
(d) The ending raw materials inventory equals 10% of the following month’s raw materials production needs. Each unit of finished goods requires 5 pounds of raw materials. The raw materials cost $2.50 per pound.
(e) Thirty-percent of raw materials purchases are paid for in the month of purchase and 70% in the following month.
(f) The direct labor wage rate is $14 per hour. Each unit of finished goods requires two direct labor-hours.
(g) The variable selling and administrative expense per unit sold is $1.40. The fixed selling and administrative expense per month is $63,000.

 

If the cost of raw materials purchases in June is $119,800, what are the estimated cash disbursements for raw materials purchases in July?

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