PROBLEM 9-18 Direct Materials and Direct Labor Budgets [LO4, LO5] 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 2nd Quarter 3rd Quarter 4th Quarter Units to be produced. 5,000 8,000 7,000 6,000 In addition, the beginning raw materials inventory for the lst Quarter is budgeted to be 6,000 grams and the beginning accounts payable for the Ist Quarter is budgeted to be $2,880. Each unit requires 8 grams of raw material that costs S1.20 per gram. Management desires to end each quarter with an inventory of raw materials equal to 25% of the following quarter's pro- duction 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 S11.50 per hour. Required: 1. Prepare the company's direct materials budget and schedule of expected cash disbursements for purchases of materials for the upcoming fiscal year. 2. Prepare the company's direct labor budget for the upcoming fiscal year, assuming that the di- rect labor workforce is adjusted each quarter to match the number of hours required to pro- duce the forecasted number of units produced.
PROBLEM 9-18 Direct Materials and Direct Labor Budgets [LO4, LO5] 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 2nd Quarter 3rd Quarter 4th Quarter Units to be produced. 5,000 8,000 7,000 6,000 In addition, the beginning raw materials inventory for the lst Quarter is budgeted to be 6,000 grams and the beginning accounts payable for the Ist Quarter is budgeted to be $2,880. Each unit requires 8 grams of raw material that costs S1.20 per gram. Management desires to end each quarter with an inventory of raw materials equal to 25% of the following quarter's pro- duction 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 S11.50 per hour. Required: 1. Prepare the company's direct materials budget and schedule of expected cash disbursements for purchases of materials for the upcoming fiscal year. 2. Prepare the company's direct labor budget for the upcoming fiscal year, assuming that the di- rect labor workforce is adjusted each quarter to match the number of hours required to pro- duce the forecasted number of units produced.
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A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
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A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
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![PROBLEM 9-18 Direct Materials and Direct Labor Budgets [LO4, LO5]
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
2nd Quarter
3rd Quarter
4th Quarter
Units to be produced......
5,000
8,000
7,000
6,000
In addition, the beginning raw materials inventory for the 1st Quarter is budgeted to be 6,000 grams
and the beginning accounts payable for the 1st Quarter is budgeted to be $2,880.
Each unit requires 8 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 pro-
duction 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 $11.50 per hour.
Required:
1. Prepare the company's direct materials budget and schedule of expected cash disbursements
for purchases of materials for the upcoming fiscal year.
2. Prepare the company's direct labor budget for the upcoming fiscal year, assuming that the di-
rect labor workforce is adjusted each quarter to match the number of hours required to pro-
duce the forecasted number of units produced.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F6504ce55-9911-43b3-b40a-032813a6dce1%2Fee66d709-d472-4b38-935a-a05cc7877898%2Fktwfhi_processed.jpeg&w=3840&q=75)
Transcribed Image Text:PROBLEM 9-18 Direct Materials and Direct Labor Budgets [LO4, LO5]
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
2nd Quarter
3rd Quarter
4th Quarter
Units to be produced......
5,000
8,000
7,000
6,000
In addition, the beginning raw materials inventory for the 1st Quarter is budgeted to be 6,000 grams
and the beginning accounts payable for the 1st Quarter is budgeted to be $2,880.
Each unit requires 8 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 pro-
duction 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 $11.50 per hour.
Required:
1. Prepare the company's direct materials budget and schedule of expected cash disbursements
for purchases of materials for the upcoming fiscal year.
2. Prepare the company's direct labor budget for the upcoming fiscal year, assuming that the di-
rect labor workforce is adjusted each quarter to match the number of hours required to pro-
duce the forecasted number of units produced.
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