Michard Corporation makes one product and it provided the following information to help prepare the master budget for the next four months of operations:The budgeted selling price per unit is $125. Budgeted unit sales for April, May, June, and July are 7,600, 10,500, 13,800, and 12,900 units, respectively. All sales are on credit.Regarding credit sales, 20% are collected in the month of the sale and 80% in the following month.The ending finished goods inventory equals 20% of the following month's sales.The ending raw materials inventory equals 30% of the following month's raw materials production needs. Each unit of finished goods requires 4 pounds of raw materials. The raw materials cost $2.00 per pound.Regarding raw materials purchases, 30% are paid for in the month of purchase and 70% in the following month.The direct labor wage rate is $25.00 per hour. Each unit of finished goods requires 3.0 direct labor-hours.The variable selling and administrative expense per unit sold is $3.40. The fixed selling and administrative expense per month is $80,000.The budgeted sales for May is closest to:

A) $1,725,000
B) $950,000
C) $1,312,500
D) $1,612,500

To calculate the budgeted sales for May, we need to use the information provided in the question.

First, we need to calculate the number of units sold in May:

Unit sales in May = 10,500 units

Next, we need to calculate the number of units sold on credit that will be collected in May:

Credit sales in May = Unit sales in May x Percentage of credit sales collected in the month of sale
Credit sales in May = 10,500 x 20% = 2,100 units

The remaining credit sales of May will be collected in June:

Credit sales collected in June = Credit sales from May x Percentage of credit sales collected in the following month
Credit sales collected in June = 10,500 x 80% = 8,400 units

Total sales in May (cash + credit) = Unit sales in May + Credit sales collected in May = 10,500 + 2,100 = 12,600 units

Now we need to calculate the raw materials needed for May, which will be equal to the following month's sales:

Raw materials needed for May = 20% x Unit sales in June x 4 pounds per unit
Raw materials needed for May = 20% x 13,800 x 4 = 11,040 pounds

The raw materials purchases in May will be equal to the raw materials needed for June plus the ending raw materials inventory for May minus the beginning raw materials inventory for June:

Raw materials purchases in May = Raw materials needed for May + Ending raw materials inventory for May - Beginning raw materials inventory for June
Raw materials purchases in May = 11,040 + (30% x 13,800 x 4) - (30% x 11,040) = 14,976 pounds

The cost of raw materials purchases in May will be equal to the pounds of raw materials purchases multiplied by the cost per pound:

Cost of raw materials purchases in May = Raw materials purchases in May x Cost per pound
Cost of raw materials purchases in May = 14,976 x $2.00 = $29,952

To calculate the direct labor costs in May, we need to multiply the number of units produced (which is equal to the number of units sold) by the direct labor-hours per unit and the direct labor wage rate:

Direct labor costs in May = Unit sales in May x Direct labor-hours per unit x Direct labor wage rate
Direct labor costs in May = 10,500 x 3.0 x $25.00 = $787,500

To calculate the variable selling and administrative expenses in May, we need to multiply the number of units sold by the variable selling and administrative expense per unit:

Variable selling and administrative expenses in May = Unit sales in May x Variable selling and administrative expense per unit
Variable selling and administrative expenses in May = 10,500 x $3.40 = $35,700

To calculate the total budgeted sales for May, we need to add up the total cost of goods sold (which includes raw materials, direct labor, and variable selling and administrative expenses) and the fixed selling and administrative expense:

Total cost of goods sold in May = Cost of raw materials purchases in May + Direct labor costs in May + Variable selling and administrative expenses in May
Total cost of goods sold in May = $29,952 + $787,500 + $35,700 = $853,152

Total budgeted sales for May = Total cost of goods sold in May + Fixed selling and administrative expense
Total budgeted sales for May = $853,152 + $80,000 = $933,152

Therefore, the best choice is C) $1,312,500.