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 22, 2nd Quarter 25,000 3rd Quarter 24.ee 4th Quarter 23,000 In addition, 27.500 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 $8,200. Each unit requires 5 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 $13.50 per hour. Required: 1.82. 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 Reg 4

Answer 1

	1st	2nd	3rd	4th	Year
Units to be produced	22,000	25,000	24,000	23,000	94,000
Raw material per unit	5	5	5	5	5
Raw material required for production	110,000	125,000	120,000	115,000	470,000
Add: desired ending Inventory	31,250	30,000	28,750	7,000	7,000
Total Required	141,250	155,000	148,750	122,000	477,000
Less: Beginning Inventory	27,500	31,250	30,000	28,750	27,500
Total purchases required	113,750	123,750	118,750	93,250	449,500
Cost per gram	1.4	1.4	1.4	1.4	1.4
Cost of purchases	159,250	173,250	166,250	130,550	629,300
Expected Disbursements
	1st	2nd	3rd	4th	Year
Cost of purchases	159,250	173,250	166,250	130,550	629,300
60% in the same quarter	95,550	103,950	99,750	78,330	377,580
40% in following quarter	8,200	63,700	69,300	66,500	207,700
Expected Disbursements	103,750	167,650	169,050	144,830	585,280
Direct Labor cost
	1st	2nd	3rd	4th	Year
Units to be produced	22,000	25,000	24,000	23,000	94,000
Labor Hours per unit	0.4	0.4	0.4	0.4	0.4
Labor hours required	8,800	10,000	9,600	9,200	37,600
Rate per hour	13.5	13.5	13.5	13.5	13.5
Estimated Direct Labor cost	118,800	135,000	129,600	124,200	507,600