A B E H 1 2 Exercise 8-16 Direct Materials and Direct Labor Budgets 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 3 4 5 6 In addition, 6,000 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 $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 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 $11,50 per hour. N000 7 8 9 10 1.20 cost per gram Raw materials inventory, Beginning of Ist quarter 6,000 grams Amount of raw material per unit 8 grams s Raw materials inventory: 25% bf next quarter's production need! Desired ending raw materials inventory, end of 4th quarter 8,000 grams 11 12 13 6096 Quarter after 40% Raw materials purchases Quarter of 0.10E11 Exercise 8-16 G H Raw materials purchases: Quarter of 60% Quarter after 40% Direct labor-hours required per unit Direct labor-hour wage 0.20 DLHOS 11.50 per hour s Beginning accounts payable $ 2,880 2 3 3rd Quarter 4th Quarter Year Prepare a direct materials budget for the upcoming fiscal year. Zan Corporation Direct Materials Budget 1st Quarter 2nd Quarter Required production to units of finished soods Units of raw materials needed to meet production Add desired units of endine raw materials Inventory Total units of raw materials needed 25 26 27 Less units of bezinning raw materials inventory 28 E H B C D Less units of beginning raw materials Inventory Units of raw materials to be purchased 19 Cost of raw materials to be purchased 30 31 32 23 Prepare a schedule at expected cash disbursement for the upcoming fiscal year 34 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Year 36 37 30 Being accounts payable 1st quarter purchases 2nd quarter purchases 3rd quarter purchases $th quarter purchases Total cash disbursements for purchases Disbursed 39 40 41 12 Prepare a direct labor budget for the upcoming fiscal years Zan Corporation Direct Labor Budget 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter vear A D E F G H 7 Cast Disbur 38 2nd quarter purchases 3rd quarter purchases 4th quarter purchases Total cash disbursements for purchases 39 40 41 42 Prepare a direct labor budget for the upcoming fiscal year: Zan Corporation Direct Labor Budget 43 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Year GS 46 Required production, in units Total direct labor-hours needed Total direct labor cost 47 48 49 50 52 5