Question

Hello, I have a cost accounting question. I think I have part 1 correct but am struggling with 2a and b

he marketing department of Gaeber Industries has submitted the following sales forecast for the upcoming fiscal year:

  

	1st Quarter	2nd Quarter	3rd Quarter	4th Quarter
Budgeted sales (units)	8,100	7,100	5,900	7,100

The company expects to start the first quarter with 1,620 units in finished goods inventory. Management desires an ending finished goods inventory in each quarter equal to 20% of the next quarter’s budgeted sales. The desired ending finished goods inventory for the fourth quarter is 1,890 units.

     In addition, the beginning raw materials inventory for the first quarter is budgeted to be 5,020 kilograms and the beginning accounts payable for the first quarter are budgeted to be $16,720.

     Each unit requires two kilograms of raw material that costs $8 per kilogram. Management desires to end each quarter with an inventory of raw materials equal to 20% of the following quarter’s production needs. The desired ending inventory for the fourth quarter is 3,330 kilograms. Management plans to pay for 65% of raw material purchases in the quarter acquired and 35% in the following quarter.

  

Required:
1.	Prepare the company's production budget for the upcoming fiscal year.

GAEBER INDUSTRIES
Production Budget
	1st Quarter	2nd Quarter	3rd Quarter	4th Quarter	Year
Budgeted sales (units)	8,100	7,100	5,900	7,100	28,200
Add: Desired ending inventory	1,420	1,180	1,420	1,890	1,890
Total units needed	9,520	8,280	7,320	8,990	30,090
Deduct: Beginning inventory	1,620	1,420	1,180	1,420	1,620
Required production	7,900	6,860	6,140	7,570	28,470

2-a.	Prepare the company's direct materials budget.

2-a.	Prepare the company's direct materials budget.

        

2-b.	Prepare the schedule of expected cash disbursements for materials for the upcoming fiscal year. (Round your answer to the nearest whole dollar amount.)

        

Answer 1

2a. Direct Material Budget

Quarter	1st	2nd	3rd	4th	Total
Total Production	7900	6860	6140	7570	28,470
Material per unit (Kgs)	2	2	2	2	2
Total Materials Reqd	15,800	13,720	12,280	15,140	56,940
Add: Ending Materials (20% next month)	13720×20% = 2744	2456	3028	3300	3300
	18,544	16,176	15,308	18,440	59,940
Less: Begining Inventory	5020	2744	2456	3028	5020
Direct material required	13,524	13,432	12,852	15,412	55,220
Cost per Kg ($)	8	8	8	8	8
Total Cost ($)	108,192	107,456	102,816	123,296	441,760

Cash Disbursements to Accounts Payable ($)

	1st	2nd	3rd	4th	Total
65% of current quarter	70324.80	69,846.40	66,830.40	80,142.4	287,144
35% previous quarter	16,720	37,867.20	37,609.60	35,985.60	128,182.40
Total Payment	87044.80	107,713.60	104,440	116,128	415,326.40