The production department of Headstrong 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 G Quarter Units to be produced 7,000 8,000 6,000 5.000 In addition, the beginning raw materials inventory for the first quarter is budgeted to be 1,400 kilograms and the beginning accounts payable for the first quarter are budgeted to be $2,940. Each unit requires two kilograms of raw material that costs $1.40 per kilogram. Management desires to end each quarter with an inventory of raw materials equal to 10% of the following quarter's production needs. The desired ending inventory for the fourth quarter is 1,500 kilograms. Management plans to pay for 80% of raw material purchases in the quarter acquired and 20% in the following quarter. Each unit requires 0.60 direct labour - hours, and direct labour-hour workers are paid $14 per hour. Required: 1. Prepare the company's direct materials budget and schedule of expected cash disbursements for materials for the upcoming fiscal year. 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 forecasted number.
The production department of Headstrong 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 G Quarter Units to be produced 7,000 8,000 6,000 5.000 In addition, the beginning raw materials inventory for the first quarter is budgeted to be 1,400 kilograms and the beginning accounts payable for the first quarter are budgeted to be $2,940. Each unit requires two kilograms of raw material that costs $1.40 per kilogram. Management desires to end each quarter with an inventory of raw materials equal to 10% of the following quarter's production needs. The desired ending inventory for the fourth quarter is 1,500 kilograms. Management plans to pay for 80% of raw material purchases in the quarter acquired and 20% in the following quarter. Each unit requires 0.60 direct labour - hours, and direct labour-hour workers are paid $14 per hour. Required: 1. Prepare the company's direct materials budget and schedule of expected cash disbursements for materials for the upcoming fiscal year. 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 forecasted number.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Master Budget
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.
Sales Budget and Selling
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.
Question
Transcribed Image Text:The production department of Headstrong 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 G
Quarter Units to be produced 7,000 8,000 6,000 5.000 In addition, the beginning raw materials
inventory for the first quarter is budgeted to be 1,400 kilograms and the beginning accounts payable
for the first quarter are budgeted to be $2,940. Each unit requires two kilograms of raw material
that costs $1.40 per kilogram. Management desires to end each quarter with an inventory of raw
materials equal to 10% of the following quarter's production needs. The desired ending inventory for
the fourth quarter is 1, 500 kilograms. Management plans to pay for 80% of raw material purchases
in the quarter acquired and 20% in the following quarter. Each unit requires 0.60 direct labour -
hours, and direct labour - hour workers are paid $14 per hour.
Required: 1. Prepare the company's direct materials budget and schedule of expected cash
disbursements for materials for the upcoming fiscal year.
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
forecasted number.
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