Zan Corporation's production budget for next year contains the following estimates: 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter 15,000 18,000 17,000 16,000 Units to be produced In addition, 30,000 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 $6,800. Each unit requires 8 grams of raw materials that cost $1.60 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 6,000 grams. Management plans to pay for 60% of raw materials purchases in the quarter acquired and 40% in the following quarter. Each unit requires 0.20 direct labor-hour and direct laborers are paid $11.50 per hour. Required: 1. and 2. Calculate the estimated grams of raw materials 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.
Zan Corporation's production budget for next year contains the following estimates: 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter 15,000 18,000 17,000 16,000 Units to be produced In addition, 30,000 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 $6,800. Each unit requires 8 grams of raw materials that cost $1.60 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 6,000 grams. Management plans to pay for 60% of raw materials purchases in the quarter acquired and 40% in the following quarter. Each unit requires 0.20 direct labor-hour and direct laborers are paid $11.50 per hour. Required: 1. and 2. Calculate the estimated grams of raw materials 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.
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter8: Budgeting For Planning And Control
Section: Chapter Questions
Problem 11CE: Shalimar Company manufactures and sells industrial products. For next year, Shalimar has budgeted...
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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:Zan Corporation's production budget for next year contains the following estimates:
1st Quarter
15,000
3rd Quarter 4th Quarter
17,000
16,000
Units to be produced
2nd Quarter
18,000
In addition, 30,000 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 $6,800.
Each unit requires 8 grams of raw materials that cost $1.60 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 6,000
grams. Management plans to pay for 60% of raw materials purchases in the quarter acquired and 40% in the following quarter. Each
unit requires 0.20 direct labor-hour and direct laborers are paid $11.50 per hour.
Required:
1. and 2. Calculate the estimated grams of raw materials 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.
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