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The production department of Zan Corporation has submitted the following forecast of units to be produced by quarter for the upcoming fiscal year.
Units to be produced....1st quarter 2nd quarter 3rd quarter 4th quarter 5,000 8,000 7,000 6,000 In addition, the beginning raw materials inventory for the 1st quarter is budgeted to be 6,000 grams and the beginning accounts payable for the 1st quarter is bugeted to be $2,800. 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.
1. Prepare the company's direct materials budget and schedule of expected cash disbursements for purchases of materials for the upcoming fiscal.
2. Prepare the company's direct labor budget for the upcoming fiscal year, assuming that the direct labor workforce is adjusted each quarter to match the number of hours requirec to produce the forecased number of units produced.
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