Question

Exercise 7-4 Preparing Direct Materials and Direct Labour Budgets (LO2 - CC7, 8) The production department of Hareston Company has submitted the following forecast of units to be produced by quarter for the upcoming fiscal year: 2nd ist Quarter Quarter 8,800 9,800 3rd Quarter 7,800 4th Quarter 6,800 Units to be produced In addition, the beginning raw materials inventory for the first quarter is budgeted to be 2,300 kilograms and the beginning accounts payable for the first quarter are budgeted to be $3,840. Each unit requires 3.8 kilograms of raw material that costs $3.20 per kilogram. Management desires to end each quarter with an inventory of raw materials equal to 10% of the following quarter's production needs. The desired ending inventory for the fourth quarter is 2,850 kilograms. Management plans to pay for 80% of raw material purchases in the quarter acquired and 20% in the following quarter. Each unit requires 0.6 direct labour-hours, and direct labour-hour workers are paid $23.0 per hour. Required: 1- Prepare the company's direct materials budget. (Round your answer to the nearest a. whole dollar amount.)

Answer 1

			Direct Materials Budget
			1st QTR	2nd QTR	3rd QTR	4th QTR	Year
Raw materials to b purchased in kg			33,440	37,240	29,640	25,840	126,160
Add: Desired ending inventory			3724	2964	2584	2,850	2,850
total needs			37,164	40,204	32,224	28,690	129,010
less :Beginning inventory			2,300	3724	2964	2584	2,300
Raw materials to b purchased			34,864	36,480	29,260	26,106	126,710
cost of RM to be purchased			111565	116736	93632	83539	405472
			Schedule of Expected Cash Disbursement for Materials
			1st QTR	2nd QTR	3rd QTR	4th QTR	Year
Accounts payable,beginning balance			3,840				3,840
1st qtr purchses			89252	22313			111565
2nd quarter purchases				93389	23347		116736
3rd quarter purchases					74906	18726	93632
4th quarter purchases						66831	66831
total cash disbursements for materials			93092	115702	98253	85558	392604
			Direct labor Budget
			1st QTR	2nd QTR	3rd QTR	4th QTR	Year
Total direct labor-hours needed			5,280	5,880	4,680	4,080	19,920
total direct labor cost			121440	135240	107640	93840	458160