Petrini Corporation makes one product and it provided the following information to help prepare the master budget for the next four months of operations:

Petrini Corporation makes one product and it provided the following information to help prepare the master budget for the next four months of operations:

1. The budgeted selling price per unit is $110. Budgeted unit sales for January, February, March, and April are 7,500, 10,600, 12,000, and 11,700 units, respectively. All sales are on credit.
2. Regarding credit sales, 30% are collected in the month of the sale and 70% in the following month.
3. The ending finished goods inventory equals 30% of the following month's sales.
4. 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 $4.00 per pound.
5. Regarding raw materials purchases, 40% are paid for in the month of purchase and 60% in the following month.
6. The direct labor wage rate is $23.00 per hour. Each unit of finished goods requires 2.6 direct labor-hours.
7. Manufacturing overhead is entirely variable and is $8.00 per direct labor-hour.
8. The variable selling and administrative expense per unit sold is $1.70. The fixed selling and administrative expense per month is $70,000.

The budgeted accounts receivable balance at the end of February is closest to:

Multiple Choice

• $1,166,000
• $777,000
• $349,800
• $816,200

  Correct

Explanation

The budgeted accounts receivable balance at the end of February is:

February sales 10,600 units × $110 per unit (a)	$	1,166,000
Percent uncollected (b)		70	%
Accounts receivable (a) × (b)	$	816,200