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 Quarter Units to be produced 8,100 9,100 7,100 6,100 In addition, the beginning raw materials inventory for the first quarter is budgeted to be 1,950 kilograms and the beginning accounts payable for the first quarter are budgeted to be $3,490. Each unit requires 3.1 kg of raw material that costs $2.50 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
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.
The production department of Headstrong Company has submitted the following
| 1st Quarter | 2nd Quarter | 3rd Quarter | 4th Quarter | |
| Units to be produced | 8,100 | 9,100 | 7,100 | 6,100 |
In addition, the beginning raw materials inventory for the first quarter is budgeted to be 1,950 kilograms and the beginning accounts payable for the first quarter are budgeted to be $3,490.
Each unit requires 3.1 kg of raw material that costs $2.50 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 2,325 kilograms. Management plans to pay for 80% of raw material purchases in the quarter acquired and 20% in the following quarter. Each unit requires 0.6 direct labour-hours, and direct labour-hour workers are paid $19.5 per hour.
Required:
1-a. Prepare the company's direct materials budget. (Round your answer to the nearest whole dollar amount.)
1-b. Prepare the schedule of expected cash disbursements for materials for the upcoming fiscal year. (Round your answer to the nearest whole dollar amount.)
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 of units produced. (Do not round intermediate calculations.)
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