Exercise 8-16 Direct Materials and Direct Labor Budgets (LO8-4, LO8-5) 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 11, 20 2nd Quarter 1 4, eee 3rd Quarter 13, eee 4th Quarter 12, Units to be produced In addition, 11,000 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 $6,000. Each unit requires 4 grams of raw material that costs $1.60 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 6.000 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 $12.50 per hour. Required: 1.&2. Calculate the estimated grams of raw material that need to be purchased and the cost of raw material purchases for each quarter and for the year as a whole. 3. Calculate the expected cash disbursements for purchases of materials for each quarter and for the year as a whole. 4. Calculate the estimated direct labor cost for each quarter and for the year as a whole. Exercise 8-18 Cash Flows; Budgeted Income Statement and Balance Sheet [LO8-2, LO8-3, LO8-9, LO8-10] Wolfpack Company is a merchandising company that is preparing a budget for the month of July. It has provided the following information: $ Wolfpack Company Balance Sheet June 30 Assets Cash Accounts receivable Inventory Buildings and equipment, net of depreciation Total assets Liabilities and Stockholders' Equity Accounts payable Common stock Retained earnings Total liabilities and stockholders' equity 75,600 61,800 36,600 199,000 373,000 $ $ 33,000 100,000 240,000 $ 373,000 Budgeting Assumptions: 1. All sales are on account. Thirty percent of the credit sales are collected in the month of sale and the remaining 70% are collected in the month subsequent to the sale. The accounts receivable at June 30 will be collected in July 2. All merchandise purchases are on account. Twenty percent of merchandise inventory purchases are paid in the month of the purchase and the remaining 80% is paid in the month after the purchase. The accounts payable at June 30 will be paid in July 3. The budgeted inventory balance at July 31 is $37,800. 4. Depreciation expense is $3,980 per month. All other selling and administrative expenses are paid in full in the month the expense is incurred. 5. The company's cash budget for July shows expected cash collections of $98,700, expected cash disbursements for merchandise purchases of $48,000, and cash paid for selling and administrative expenses of $20,620. Required: 1. For the month of July, calculate the following: a. Budgeted sales b. Budgeted merchandise purchases c. Budgeted cost of goods sold d. Budgeted net operating income 2. Prepare a budgeted balance sheet as of July 31
