Question

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 16,880 2nd Quarter 19,089 3rd Quarter 4th Quarter 1 8,000 17,889 Units to be produced In addition, 16,000 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 $7,000 Each unit requires 4 grams of raw material that costs $180 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 $12.50 per hour. Required: 182 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. Complete this question by entering your answers in the tabs below. Req 1 and 2 Reg 3 Reg 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. 2nd Bad Quarter Quarter Quarter Quarter Your Estimated grams of raw material to be purchased Cost of raw materials to be purchased

Answer 1

Req 1 & 2
Zan corporation
Direct materials budget
	1st quarter	2nd quarter	3rd quarter	4th quarter	year
Units to be produced	16,000	19,000	18,000	17,000	70,000
Units of raw materials needed per unit of finished goods	4.00	4.00	4.00	4.00	4.00
Units of raw materials needed to meet production	64,000	76,000	72,000	68,000	280,000
(+) desired ending inventory of raw materials [ 25% * Following quarter's production needs ]	19,000	18,000	17,000	5,000	5,000
Total units of raw materials needed	83,000	94,000	89,000	73,000	285,000
(-) Units of Beginning of raw materials inventory	16,000	19,000	18,000	17,000	16,000
Estimated grams of raw materials to be purchased	67,000	75,000	71,000	56,000	269,000
Unit cost of raw materials	$               1.80	$             1.80	$               1.80	$                  1.80	$                 1.80
Cost of raw materials to purchased	$        120,600	$      135,000	$        127,800	$           100,800	$          484,200

Req 3 :
Schedule of expected cash disbursements for materials
	1st quarter	2nd quarter	3rd quarter	4th quarter	year
Beginning accounts payables	$             7,000				$               7,000
1st quarter purchases	$          72,360	$         48,240			$          120,600
2nd quarter purchases		$         81,000	$          54,000		$          135,000
3rd quarter purchases			$          76,680	$             51,120	$          127,800
4th quarter purchases				$             60,480	$             60,480
Total cash disbursements for materials	$          79,360	$      129,240	$        130,680	$           111,600	$          450,880

Req 4 :
Zan corporation
Direct labour budget
	1st quarter	2nd quarter	3rd quarter	4th quarter	year
Units to be produced	16,000	19,000	18,000	17,000	70,000
(*) Direct labor hours required per unit	0.40	0.40	0.40	0.40	0.40
Total direct labor hours required	6,400	7,600	7,200	6,800	28,000
(*) Direct labor rate per hour	$             12.50	$           12.50	$            12.50	$                12.50	$               12.50
Total direct labor cost	$          80,000	$         95,000	$          90,000	$             85,000	$          350,000