The production department of Zan Corporation has submitted the following forecast of units to be produced by quarter for the upcoming fiscal year Units to be produced 1st 2nd 3rd 4th Quarter Quarter Quarter Quarter 5,200 8,200 7,200 6,200 In addition, 6.200 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 $3,080 Each unit requires 8.20 grams of raw material that costs $1.60 per gram 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 4th quarter is 8,200 grams. Management plans to pay for 80% of raw material purchases in the quarter acquired and 20% in the following quarter. Each unit requires 0.40 direct labour-hours and direct labourers are paid $11.10 per hour. Required: 1. Prepare the company's direct materials purchases budget and schedule of expected cash disbursements for materials for the upcoming fiscal year. Zan Corporation Direct Materials Budget 1st Quarter 2nd Quarter 5.200 8.200 8.20 8.20 42,640 67.240 3rd Quarter 7,200 820 59,040 4th Quarter 6,200 8.20 50,840 Year 26.800 8.20 219.780 Required production in units of finished goods Units of raw materials needed per unit of finished goods Units of raw materiais needed to meet production Add: Desired units of ending raw materials inventory Total units of raw materials needed Less: Units of beginning raw materials inventory Units of raw materials to be purchased Unit cost of raw materials Cost of raw materials to be purchased 42,640 67,240 59,040 50,840 219,760 50.840 219,760 42,640 1.60 $ 68 224 $ $ $ 67,240 1.60 $ 107,584 $ 59.040 1.60 $ 94,464 $ 1.60 1.60 $ 81,344 $ 351,816 0 $ 0 $ 3,000 0 0 Schedule of Expected Cash Disbursements for Materials Beginning accounts payable 3,080 $ 0 1st Quarter purchases 2nd Quarter purchases 0 3rd Quarter purchases 0 0 4th Quarter purchases 0 0 Total cash disbursements for materials $ 3,080 $ 0$ 0 0 0 $ 0 3,080 2. Prepare the company's direct labour budget for the upcoming fiscal year, assuming that the direct labour workforce is adjusted each quarter to match the number of hours required to produce the forecast number of units produced Required production in units Direct labour-hours per unit Total direct labour-hours needed Direct labour cost per hour Total direct labour cost Zan Corporation Direct Labour Budget 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Year 5,200 8,200 7,200 6,200 26,800 0.40 0.40 0.40 0.40 0.40 2,080 3,280 2,880 2,480 10,720 $ 11.10 $ 11.10 $ 11.10 $ 11.10 $ 11.10 $ 23,088 $ 36,408 $ 31,968 $ 27,528 $ 118,992
