The production department of Priston Company has submitted the following forecast of units to be produced by quarter for the upcoming fiscal year.
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1st Quarter
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2nd Quarter
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3rd Quarter
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4th Quarter
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Units to be produced
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7,000
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8,000
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9,000
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6,000
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In addition, the beginning raw materials inventory for the 1st Quarter is budgeted to be 4,200 pounds and the beginning accounts payable for the 1st Quarter is budgeted to be $13,300.
Each unit requires four pounds of raw material that costs $3.00 per pound. Management desires to end each quarter with a raw materials inventory equal to 15% of the following quarter’s production needs. The desired ending inventory for the 4th Quarter is 4,500 pounds. Management plans to pay for 70% of raw material purchases in the quarter acquired and 30% in the following quarter. Each unit requires 0.5 direct labor-hours and direct labor-hour workers are paid $13 per hour.
Required:
1a. Prepare the company’s direct materials budget for the upcoming fiscal year. (Input all amounts as positive values. Do not round intermediate calculations.)
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Priston Company
Direct Materials Budget
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1st Quarter
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2nd Quarter
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3rd Quarter
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4th Quarter
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Year
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Production needs - pounds
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(Click to select)AddDeduct: (Click to select)Ending inventoryBeginning inventory
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Total needs - pounds
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(Click to select)AddDeduct: (Click to select)Ending inventoryBeginning inventory
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Raw materials to be purchased - pounds
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Cost of raw materials to be purchased
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$
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$
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$
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$
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$
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1b. Prepare a schedule of expected cash disbursements for purchases of materials for the upcoming fiscal year. (Leave no cells blank - be certain to enter "0" wherever required. Do not round intermediate calculations.)
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Schedule of Expected Cash Disbursements for Materials
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1st Quarter
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2nd Quarter
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3rd Quarter
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4th Quarter
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Year
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Accounts payable, beginning balance
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$
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$
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$
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$
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$
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1st Quarter purchases
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2nd Quarter purchases
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3rd Quarter purchases
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4th Quarter purchases
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Total cash disbursements for materials
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$
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$
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$
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$
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$
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2. Complete 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 required to produce the forecasted number of units produced.
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Priston Company
Direct Labor Budget
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1st Quarter
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2nd Quarter
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3rd Quarter
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4th Quarter
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Year
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Total direct labor-hours needed
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Total direct labor cost
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$
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$
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$
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$
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$
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