The production department of Zan Corporation has submitted the following forecast of units to be produced by quarter for the upcoming fiscal year:
|1st Quarter||2nd Quarter||3rd Quarter||4th Quarter|
|Units to be produced||18,000||21,000||20,000||19,000|
In addition, 27,000 grams of raw materials inventory is on hand at the start of the 1st Quarter and the beginning accounts payable for the 1st Quarter is $7,400.
Each unit requires 6 grams of raw material that costs $1.40 per gram. Management desires to end each quarter with an inventory of raw materials equal to 25% of the following quarter’s production needs. The desired ending inventory for the 4th Quarter is 7,000 grams. Management plans to pay for 60% of raw material purchases in the quarter acquired and 40% in the following quarter. Each unit requires 0.40 direct labor-hours and direct laborers are paid $14.50 per hour.
1.&2. Calculate the estimated grams of raw material that need to be purchased and the cost of raw material purchases for each quarter and for the year as a whole.
3. Calculate the expected cash disbursements for purchases of materials for each quarter and for the year as a whole.
4. Calculate the estimated direct labor cost for each quarter and for the year as a whole.
Calculate the estimated grams of raw material that need to be purchased and the cost of raw material purchases for each quarter and for the year as a whole.
Calculate the expected cash disbursements for purchases of materials for each quarter and for the year as a whole.
Calculate the estimated direct labor cost for each quarter and for the year as a whole. (Round "Direct labor-hours per unit" and "Direct labor cost per hour" answers to 2 decimal places.)
|Direct Materials Budget|
|Required production in units of finished goods||18000||21000||20000||19000||78000|
|Units of raw materials needed per unit of finished goods||6||6||6||6||6|
|Units of raw materials needed to meet production||108000||126000||120000||114000||468000|
|Add: Desired Ending Raw Material inventory (25% of next Quarter production needs)||31500||30000||28500||7000||7000|
|Total units of raw materials needed||139500||156000||148500||121000||475000|
|Less: Beginning Raw Material inventory||27000||31500||30000||28500||27000|
|Units of raw materials to be purchased||112500||124500||118500||92500||448000|
|Unit cost of raw materials||$1.40||$1.40||$1.40||$1.40||$1.40|
|Cost of raw materials to be purchased||$1,57,500||$1,74,300||$1,65,900||$1,29,500||$6,27,200|
|Schedule of Expected Cash Disbursements for Materials|
|Beginning accounts payable||$7,400||$7,400|
|1st Quarter purchases||$94,500||$63,000||$1,57,500|
|2nd Quarter purchases||$1,04,580||$69,720||$1,74,300|
|3rd Quarter purchases||$99,540||$66,360||$1,65,900|
|4th Quarter purchases||$77,700||$77,700|
|Total cash disbursements for materials||$1,01,900||$1,67,580||$1,69,260||$1,44,060||$5,82,800|
|Direct Labor Budget|
|Required production in units||18000||21000||20000||19000||78000|
|Direct labor-hours per unit||0.40||0.40||0.40||0.40||0.40|
|Total direct labor-hours needed||7200||8400||8000||7600||31200|
|Direct labor cost per hour||$14.50||$14.50||$14.50||$14.50||$14.50|
|Total direct labor cost||$1,04,400||$1,21,800||$1,16,000||$1,10,200||$4,52,400|
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