Question

The production department of Zan Corporation has submitted the following forecast of units to be produced by quarter for the upcoming fiscal year: Units to be produced 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter 21,000 24,000 23,000 22,000 In addition, 21,000 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 $8,000. Each unit requires 4 grams of raw material that costs $1.20 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 8,000 grams. Management plans to pay for 60% of raw material purchases in the quarter acquired and 40% in the following quarter. Each unit requires 0.20 direct labor-hours and direct laborers are paid $12.50 per hour. Required: 1-a. Prepare the company's direct materials budget for the upcoming fiscal year. (Round "Unit cost of raw materials" answers to 2 decimal places.) Zan Corporation Direct Materials Budget 1st 2nd Quarter Quarter Required production in units of finished goods Units of raw materials needed per unit of finished goods Units of raw materials needed to meet production 3rd Quarter 4th Quarter Year Total units of raw materials needed Units of raw materials to be purchased Unit cost of raw materials Cost of raw materials to be purchased

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Answer 1

					Zan Corporation
					Direct Materials Budget
					1st	2nd	3rd	4th	Year
					Qtr	Qtr	Qtr	Qtr
Required production in units of finished goods					21,000	24,000	23,000	22,000	90,000
unit of raw materials needed per unit of finished					4	4	4	4	4
units of raw materials needed to meet prodcution					84000	96000	92000	88000	360000
Add:Desired units of ending raw materials inventory					24000	23000	22000	8,000	8,000
total units of raw materials needed					108000	119000	114000	96000	368000
less:units of beginning raw materials inventory					21,000	24000	23000	22000	21,000
units of raw materials to be purchased					87,000	95000	91000	74000	347,000
units cost of raw materials					1.2	1.2	1.2	1.2	1.2
Cost of raw materials to be purchased					104400	114000	109200	88800	416400
Estimated grams of raw material to be purchased					87,000	95000	91000	74000	347,000
cost of raw materials to be prucased					104400	114000	109200	88800	416400
	total cash disbursement for materails
					1st	2nd	3rd	4th	Year
					Qtr	Qtr	Qtr	Qtr
	Accounts payable				8,000				8,000
	first (104400*60%;40%)				62640	41760			104400
	second (114000*60%;40%)					68400	45600		114000
	third (109200*60%;40%)						65520	43680	109200
	foruth (88800*60%)							53280	53280
	total cash disbursement for materials				70,640	110160	111120	96960	388,880	answer
	total direct labor cost
					1st	2nd	3rd	4th	Year
					Qtr	Qtr	Qtr	Qtr
	units produced				21,000	24,000	23,000	22,000	90,000
	direct labor hours per unit required				0.2	0.2	0.2	0.2	0.2
	total direct labor hours required				4200	4800	4600	4400	18000
	cost per direct labor hour				12.5	12.5	12.5	12.5	12.5
	total direct labor cost				52500	60000	57500	55000	225000	answer