Assignment Task: The production department of Zee 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:
1. Prepare the company's direct materials budget and schedule of expected cash disbursements for purchases of materials for the upcoming fiscal year and enter the total units of raw materials needed for the 4th quarter, the cost of raw materials to be purchased for the 4th quarter and the total cash disbursements for materials for the 4th quarter in the boxes below:
Total units of raw materials needed for the 4th quarter:
Cost of raw materials to be purchased for the 4th quarter: $
Total cash disbursements for materials for the 4th quarter: $
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 required to produce the forecasted number of units produced and enter the total direct labor hours needed for the 4th quarter and the total direct labor cost for the 4th quarter in the boxes below:
Total direct labor hours needed for the 4th quarter:
Total direct labor cost for the 4th quarter: $