| 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 | 18,000 | 21,000 | 20,000 | 19,000 |
| In addition, 27,000 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 $7,400. |
| Each unit requires 6 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 $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.) |
| Zen company | |||||
| Direct Materials Budget | |||||
| 1st Quarter | 2sd Quarter | 3rd Quarter | 4th Quarter | Year | |
| Required production | 18000 | 21000 | 20000 | 19000 | 78000 |
| Raw materials per unit | * 6 grm | * 6 grm | * 6 grm | * 6 grm | * 6 grm |
| Production needs | 108000 | 126000 | 120000 | 114000 | 468000 |
| Add desired ending inventory | 31500 | 30000 | 28500 | 7000 | 97000 |
| Total needs | 139500 | 156000 | 148500 | 121000 | 565000 |
| Less beginning inventory | 27000 | 31500 | 30000 | 28500 | 117000 |
| Raw materials to be purchased | 112500 | 124500 | 118500 | 92500 | 448000 |
| Cost of raw materials to be purchased at $1.40 per po |
157500 | 174300 | 165900 | 129500 | 627200 |
| Zen company | |||||
| schedule of expected cash disbursements for purchases of materials | |||||
| Particular | $ | $ | $ | $ | |
| Accounts payable, beginning balance | 7400 | 7400 | |||
| 1st Quarter purchases | 94500 | 63000 | 157500 | ||
| nd Quarter purchases | 104580 | 69720 | 174300 | ||
| 3rd Quarter purchases | 99540 | 66360 | 165900 | ||
| 4th Quarter purchases | 77700 | 77700 | |||
| Total cash disbursements for materials | 101900 | 167580 | 169260 | 144060 | 582800 |
| Zen company | |||||
| Direct labour budget | |||||
| 1st Quarter | 2sd Quarter | 3rd Quarter | 4th Quarter | Year | |
| Units to be produced | 18000 | 21000 | 20000 | 19000 | 78000 |
| Direct labor time per unit (hours) | 0.4 | 0.4 | 0.4 | 0.4 | 0.4 |
| Total direct labor-hours needed | 7200 | 8400 | 8000 | 7600 | 31200 |
| Direct labor cost per hour | 14.5 | 14.5 | 14.5 | 14.5 | 14.5 |
| Total direct labor cost | 104400 | 121800 | 116000 | 110200 | 452400 |
