The production department of Hareston Company 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 6,000 7,000 8,000 5,000
In addition, the beginning raw materials inventory for the first quarter is budgeted to be 2,400 pounds and the beginning accounts payable for the first quarter is budgeted to be $11,400.
Each unit requires two pounds of raw material that costs $4 per pound. Management desires to end each quarter with an inventory of raw materials equal to 20% of the following quarter's production needs. The desired ending inventory for the fourth quarter is 3,750 pounds. Management plans to pay for 60% of raw material purchases in the quarter acquired and 40% in the following quarter. Each unit requires 0.75 direct labor-hours and direct labor-hour workers are paid $12 per hour.
Requirement 1:
(a) Prepare the company's direct materials budget. (Input all amounts as positive values. Omit the "$" sign in your response.)
Hareston Company
Direct Materials Budget
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Year
Production needs
Less/Add: Desired ending
inventory
Total needs
Less/Add: Beginning
inventory
Raw materials to be purchased
Cost of raw materials to be purchased $
$
$
$
$
(b) Prepare the 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. Omit the "$" sign in your response.)
Schedule of Expected Cash Disbursements for Materials
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Year
Accounts payable,
beginning balance $ $ $ $ $
1st Quarter purchases
2nd Quarter purchases
3rd Quarter purchases
4th Quarter purchases
Total cash disbursements
for materials $ $ $ $ $
Requirement 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. (Omit the "$" sign in your response.)
Hareston Company
Direct Labor Budget
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Year
Total direct labor-hours needed
Total direct labor cost $ $ $ $ $