Question

The production department of Zan Corporation has submitted the following forecast of units to be produced by quarter for the upcoming fiscal year: 4th 1st Quarter 17,000 2nd Quarter 20,000 3rd Quarter 19,000 Units to be produced Quarter 18,000 In addition, 21,250 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 $7,200. Each unit requires 5 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 $13.50 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 3rd Quarter 4th Quarter Year 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 Total units of raw materials needed 0 0 0 000 Units of raw materials to be purchased Unit cost of raw materials Cost of raw materials to be purchased

Answer 1

--Requirement 1 [a]

	Quarter
	First	Second	Third	Fourth	Year
Required Production in units of finished goods	17,000	20,000	19,000	18,000	74,000
Units of raw material needed per unit of finished goods	5	5	5	5	5
Units of raw material needed to meet production	85,000	100,000	95,000	90,000	370,000
Add: Desired units of ending raw material inventory	25,000	23,750	22,500	8,000	8,000
Total units of raw material needed	110,000	123,750	117,500	98,000	378,000
Less: Units of neginning raw material inventory	21,250	25,000	23,750	22,500	21,250
Units of raw material to be purchased	88,750	98,750	93,750	75,500	356,750
Unit cost of raw materials	$1.20	$1.20	$1.20	$1.20	$1.20
Cost of raw materials to be purchased	$106,500	$118,500	$112,500	$90,600	$428,100