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

a.	The budgeted selling price per unit is $70. Budgeted unit sales for June, July, August, and September are 8,800, 19,000, 21,000, and 22,000 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 $2.40 per pound.
e.	Twenty five percent of raw materials purchases are paid for in the month of purchase and 75% 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 $2.00. The fixed selling and administrative expense per month is $69,000.

1.
value:
10.00 points

15.

What is the estimated net operating income for July, if the company always uses an estimated predetermined plantwide overhead rate of $10 per direct labor-hour? My work: I went ahead and started making all the sales budgets, production budget, etc, but I am not sure if this is necessary, and even if it is, I get stuck on making the production budget because I am not sure what to put for desired units of Ending Finished Goods Inventory for August. In the textbook there was a "assumed number" given but none in this case. Please show me how to proceed and solve this problem. Thanks so much in advance.

The best method is to do all the calculations.

Without your work we cannot comment on your method