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 14,000 2nd Quarter 17,000 3rd Quarter 16,000 4th Quarter 15,000 Units to be produced In addition, 24,500 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 $6,600. Each unit requires 7 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 $15.50 per hour. Required: 1. and 2. Calculate the estimated grams of raw material that need to be purchased and the cost of raw material purchases for each quarter and for the year as a whole. 3. Calculate the expected cash disbursements for purchases of materials for each quarter and for the year as a whole. 4. Calculate the estimated direct labor cost for each quarter and for the year as a whole.
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 14,000 2nd Quarter 17,000 3rd Quarter 16,000 4th Quarter 15,000 Units to be produced In addition, 24,500 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 $6,600. Each unit requires 7 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 $15.50 per hour. Required: 1. and 2. Calculate the estimated grams of raw material that need to be purchased and the cost of raw material purchases for each quarter and for the year as a whole. 3. Calculate the expected cash disbursements for purchases of materials for each quarter and for the year as a whole. 4. Calculate the estimated direct labor cost for each quarter and for the year as a whole.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text: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
14,000
Units to be produced
In addition, 24,500 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 $6,600.
Req 1 and 2
Each unit requires 7 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 $15.50 per hour.
Req 3
2nd Quarter
17,000
Required:
1. and 2 Calculate the estimated grams of raw material that need to be purchased and the cost of raw material purchases for each
quarter and for the year as a whole.
3. Calculate the expected cash disbursements for purchases of materials for each quarter and for the year as a whole.
4. Calculate the estimated direct labor cost for each quarter and for the year as a whole.
Complete this question by entering your answers in the tabs below.
Req 4
3rd Quarter.
16,000
Estimated grams of raw material to be purchased
Cost of raw materials to be purchased
4th Quarter
15,000
Calculate the estimated grams of raw material that need to be purchased and the cost of raw material purchases for each quarter and for the
year as a whole.
$
1st Quarter
103,250
1 $
2nd Quarter 3rd Quarter
117,250
110.250
$
4th Quarter
1 S
85,750
$
Year
416,500
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