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:
A. 87,785 pounds
B. 56,525 pounds
C. 52,100 pounds
D. 72,155 pounds
Answer: B
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