The production department of Zan Corporation has submitted the following forecas

Question

The production department of Zan Corporation has submitted the following forecast of units to be produced by quarter for the upcoming fiscal year:

In addition, 27,000 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 $7,400.

     Each unit requires 6 grams of raw material that costs $1.40 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 7,000 grams. Management plans to pay for 60% of raw material purchases in the quarter acquired and 40% in the following quarter. Each unit requires 0.40 direct labor-hours and direct laborers are paid $14.50 per hour.

Prepare the company’s direct materials budget for the upcoming fiscal year. (Round "Unit cost of raw materials" answers to 2 decimal places.)

Prepare a schedule of expected cash disbursements for purchases of materials for the upcoming fiscal year.

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. (Round "Direct labor-hours per unit" and "Direct labor cost per hour" answers to 2 decimal places.)

The production department of Zan Corporation has submitted the following forecast of units to be produced by quarter for the upcoming fiscal year:

Explanation / Answer

calculation of cost of raw materials budget

calculation of expected cash disbursements for purchase of raw materials

calculation dierct labour budget

particulars quarter1 quarter 2 quarter 3 quarter 4 required production of units 18,000 21,000 20,000 19,000 required raw materials for production in grams 18,000*6=108,000 126,000 120,000 114,000 add closing raw materials in grams 126,000*25/100=31,500 30,000 28,500 7,000 less opening raw materials in grams 27,000 31,500 30,000 28,500 raw materials to be purchased 108,000+31,500-27,000=112,500 124,500 118,500 92,500 total cost of raw material purchases $ 1.4 per gram $ 1.4* 112,500=157,500 174,300 165,900 129,500

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