Problem $2$

Tara Corporation makes one product and has provided the following information to help prepare

the master budget for the next four months of operations:

Raw materials requirement per unit of output

Raw materials cost

Direct labor requirement per unit of output....

Direct labor wage rate

per direct labor$-$

$$4\mathrm{.}40$ per pound

$4\mathrm{.}4$ direct labor$-$hours

per direct labor$-$

$$27\mathrm{.}50$ hour

Credit sales are collected:

$20\%$ in the month of the sale

$80\%$ in the following month

Raw materials purchases are paid:

$30\%$ in the month of purchase

$70\%$ in the following month

The ending finished goods inventory should equal $40\%$ of the following month's sales. The

ending raw materials inventory should equal $40\%$ of the following month's raw materials

production needs.

Required:

$($a$)$ What are the budgeted sales for August?

$($b$)$ What are the expected cash collections for August?

$($c$)$ According to the production budget, how many units should be produced in August?

$($d$)$ If $71,700$ pounds of raw materials are needed for production in September, how many pounds

of raw materials should be purchased in August?

$($e$)$ What is the estimated cost of raw materials purchases for August?

$($f$)$ If the cost of raw material purchases in July is $$46,210,$ then in August what are the total

estimated cash disbursements for raw materials purchases?

$($g$)$ What is the total estimated direct labor cost for August assuming the direct labor workforce is

adjusted to match the hours required to produce the forecasted number of units produced?