The production department of Priston Company has submitted the following forecas
ID: 2369445 • Letter: T
Question
The production department of Priston Company has submitted the following forecast of units to be produced by quarter for the upcoming fiscal year.
In addition, the beginning raw materials inventory for the 1st Quarter is budgeted to be 3,600 pounds and the beginning accounts payable for the 1st Quarter is budgeted to be $11,775.
Each unit requires three pounds of raw material that costs $2.50 per pound. Management desires to end each quarter with a raw materials inventory equal to 20% of the following quarter
The production department of Priston Company has submitted the following forecast of units to be produced by quarter for the upcoming fiscal year.
Explanation / Answer
1 Direct Materials Budget 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Units to be produced 6,000 7,000 8,000 5,000 Raw Material Required to produce (Pound) 18000 21000 24000 15000 Opening Stock of Raw Material (Pound) 3600 4200 4800 3000 Closing Stock of Raw Material (Pound) 4200 4800 3000 3700 Purchase During the quarter (Pound) 18600 21600 22200 15700 Purchase Price $ 46,500.00 $ 54,000.00 $ 55,500.00 $ 39,250.00 Cash Payment during the quarter Accounts Payable at beginning $ 11,775.00 $ 13,950.00 $ 16,200.00 $ 16,650.00 Cash Payment on Purchase during the quarter $ 32,550.00 $ 37,800.00 $ 38,850.00 $ 27,475.00 Accounts Payable of last quarter $ 11,775.00 $ 13,950.00 $ 16,200.00 $ 16,650.00 Total cash Payment $ 44,325.00 $ 51,750.00 $ 55,050.00 $ 44,125.00 Accounts Payable at end $ 13,950.00 $ 16,200.00 $ 16,650.00 $ 11,775.00 2 Direct labor budget Labour Hour required to produce budgeted unit 3000 3500 4000 2500 Direct Labour Cost $ 36,000.00 $ 42,000.00 $ 48,000.00 $ 30,000.00
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