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: 1st Quarter 13,000 2nd Quarter 3rd Quarter 4th Quarter 14,000 Units to be produced 16,000 15,000 In addition, 19,500 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 $6,400 Each unit requires 6 grams of raw material that costs $1.20 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 8,000 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 $14.50 per hour. Required 1-a. Prepare the company's direct materials budget for the upcoming fiscal year. (Round "Unit cost of raw materials" answers to 2 decimal places.) Zan Corporation Direct Materials Budget 3rd Quarter 2nd 4th Quarter Quarter Quarter Year Required production in units of finished goods Units of raw materials needed per unit of finished goods Units of raw materials needed to meet production Total units of raw materials needed Units of raw materials to be purchased Unit cost of raw materials Cost of raw materials to be purchased

Explanation / Answer

Zan Cosrporation Direct material Budget Ist Quarter 2nd Quarter 3rd Quarter 4th Quarter Total required production in units of finished goods 13000 16000 15000 14000 58000 Units of raw material neede per unit of finished goods in grams 6 6 6 6 Units of raw material needed to meet the production     78,000         96,000       90,000       84,000 348000 Total Units of raw material needed 102,000       118,500     111,000     179,000 510500 Opening Inventory     19,500         24,000       22,500       21,000 87000 Units of raw material to be purchased     82,500         94,500       88,500     158,000 423500 Unit Cost of raw material 1.2 1.2 1.2 1.2 1.2 Cost of raw material to be purchased     99,000       113,400     106,200     189,600       508,200 Zan Cosrporation Schedule of expected cash disbursements of material Ist Quarter 2nd Quarter 3rd Quarter 4th Quarter Total beginning Accounts Payable 6400           6,400 Ist Quarter Purchase     59,400         39,600         99,000 2nd Quarter Purchase         68,040       45,360       113,400 3rd Quarter Purchase       63,720       42,480       106,200 4th Quarter Purchase     113,760       113,760 Total cash disbursements for material     65,800       107,640     109,080     156,240       438,760 Zan Cosrporation Direct Labour Budget Ist Quarter 2nd Quarter 3rd Quarter 4th Quarter Total Required production in Units 13000 16000 15000 14000 58000 Direct Labour hours per unit         0.20             0.20           0.20           0.20             0.20 Total Direct labour hours needed       2,600           3,200         3,000         2,800         11,600 Direct labour Cost Per hour 14.5 14.5 14.5 14.5 14.5 Total direct labour Cosr     37,700         46,400       43,500       40,600       168,200

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