Prepare the company direct materials purchases budget

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Reference no: EM133121640

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

2nd Quarter

3rd Quarter

4th Quarter

Units to be produced

6,600

9,600

8,600

7,600

In addition, 7,600 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 $4,480.

Each unit requires 9.60 grams of raw material that costs $1.40 per gram. Management desires to end each quarter with an inventory of raw materials equal to 30% of the following quarter's production needs. The desired ending inventory for the 4th quarter is 9,600 grams. Management plans to pay for 50% of raw material purchases in the quarter acquired and 50% in the following quarter. Each unit requires 0.30 direct labour-hours and direct labourers are paid $8.30 per hour.

Required -

1. Prepare the company's direct materials purchases budget and schedule of expected cash disbursements for materials for the upcoming fiscal year.

2. Prepare the company's direct labour budget for the upcoming fiscal year, assuming that the direct labour workforce is adjusted each quarter to match the number of hours required to produce the forecast number of units produced.

Reference no: EM133121640

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