Reference no: EM132539949

Direct Materials and Direct Labor Budgets

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          2nd Quarter.           3rd Quarter.           4th Quarter

Units to be produced.            5,000                  8,000                  7,000                       6,000

• In addition, 6,000 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 $2,880.
• Each unit requires 8 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 $11.50 per hour.

Required:

Question 1: 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.

Question 2: Calculate the expected cash disbursements for purchases of materials for each quarter and for the year as a whole.

Question 3: Calculate the estimated direct labor cost for each quarter and for the year as a whole.