The production department of Hareston Company has submitted the following foreca
ID: 2434992 • Letter: T
Question
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 $ $ $ $ $
Explanation / Answer
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 12,000 14,000 16,000 10,000 52,000 Less/Add: Desired ending inventory 2,800 3,200 2,000 3,750 3,750 Total needs 14,800 17,200 18,000 13,750 55,750 Less/Add: Beginning inventory 2,400 2,800 3,200 2,000 2,400 Raw materials to purchased 12,400 14,400 14,800 11,750 53,350 Cost of raw materials $49,600 57,600 59,200 47,000 213,400 (b) Prepare the schedule of expected cash disbursements for purchases of materials for the upcoming fiscal year. (Leave no cells blank - be certain to enter "0" wherever required. Omit the "$" sign in your response.) Schedule of Expected Cash Disbursements for Materials 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Year Accounts payable, beginning balance $11,400 $ $ $ $11,400 1st Quarter purchases 29,760 19,840 49,600 2nd Quarter purchases 34,560 23,040 57,600 3rd Quarter purchases 35,520 23680 59,200 4th Quarter purchases 28,200 28,200 Total cash disbursements $41,160 $54,400 $58,560 $51,880 $206,000 for materials Requirement 2: Prepare the company's direct labor budget for the upcoming fiscal year, assuming that the direct labor workforce is adjusted each quarter to match the number of hours required to produce the forecasted number of units produced. (Omit the "$" sign in your response.) Hareston Company Direct Labor Budget 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Year Units produced 12,000 14,000 16,000 10,000 52,000 Total direct labor-hours needed 9,000 10,500 12,000 7,500 39,000 Total direct labor cost $108,000 $126,000 $144,000 $90,000 $468,000
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