Question

Units to be produced 1st Quarter 12,000 2nd Quarter 15,000 3rd Quarter 14,000 4th Quarter 13,000 In addition, 15,000 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 $6,200. Each unit requires 5 grams of raw material that costs $1.80 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 5,000 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 $13.50 per hour. Required: 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. Assume that the direct labor workforce is adjusted each quarter to match the number of hours required to produce the estimated number of units produced. Complete this question by entering your answers in the tabs below. Req 1 and 2 Req3 Req 4 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. 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Year Estimated grams of raw material to be purchased Cost of raw materials to be purchased Req 1 and 2 Req3 >

Answer 1

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Part 1 and 2
		Q1	Q2	Q3	Q4	Year
Units to be produced		12,000	15,000	14,000	13,000	54,000
Raw material required per unit		5	5	5	5	5
Total raw material required for production		60,000	75,000	70,000	65,000	270,000
Add: Desired Inventory	25%	18,750	17,500	16,250	5,000	5,000
Total Need		78,750	92,500	86,250	70,000	275,000
Less: Beginning Inventory		(15,000)	(18,750)	(17,500)	(16,250)	(15,000)
Estimated grams of material to be purchased		63,750	73,750	68,750	53,750	260,000	Part 1
cost per gram		$          1.80	$          1.80	$          1.80	$          1.80	$          1.80
Cost of raw material to be purchased		$   114,750	$   132,750	$   123,750	$      96,750	$   468,000	Part 2
Part 3
		Q1	Q2	Q3	Q4	Year
Cost of raw material to be purchased		$   114,750	$   132,750	$   123,750	$      96,750	$   468,000
60% of payment in same quarter		$      68,850	$      79,650	$      74,250	$      58,050	$   280,800
40% in next quarter			$      45,900	$      53,100	$      49,500	$   148,500
Beginning accounts payable		$        6,200				$        6,200
Total cash disbursment for materials		$      75,050	$   125,550	$   127,350	$   107,550	$   435,500
Part 4
		Q1	Q2	Q3	Q4	Year
Units to be produced		12,000	15,000	14,000	13,000	54,000
Hours required per unit		0.40	0.40	0.40	0.40	0.40
Total Hours Required for production		4,800	6,000	5,600	5,200	21,600
Per hour cost		$        13.50	$        13.50	$        13.50	$        13.50	$        13.50
Total Direct labor cost		$      64,800	$      81,000	$      75,600	$      70,200	$   291,600