E8-11 - Please explain how you arrived at your answers. Thank you! Exercise 8-11
ID: 2416428 • Letter: E
Question
E8-11 - Please explain how you arrived at your answers. Thank you!
Exercise 8-11 Direct Materials and Direct Labor Budgets [LO4, LO5]
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 $17,100.
Each unit requires two pounds of raw material that costs $2.00 per pound. Management desires to end each quarter with a raw materials inventory equal to 20% of the following quarter’s production needs. The desired ending inventory for the 4th Quarter is 6,000 pounds. Management plans to pay for 70% of raw material purchases in the quarter acquired and 30% in the following quarter. Each unit requires 0.5 direct labor-hours and direct labor-hour workers are paid $14 per hour.
Prepare the company’s direct materials budget for the upcoming fiscal year. (Do not round intermediate calculations. Input all amounts as positive values. Omit the "$" sign in your response.)
Prepare a schedule of expected cash disbursements for purchases of materials for the upcoming fiscal year. (Do not round intermediate calculations. Leave no cells blank - be certain to enter "0" wherever required. Omit the "$" sign in your response.)
Complete the company's direct labor budget for the upcoming fiscal year, assuming that the direct labor workforce is adjusted each quarter to match the number of hours required to produce the forecasted number of units produced. (Do not round intermediate calculations. Omit the "$" sign in your response.)
Exercise 8-11 Direct Materials and Direct Labor Budgets [LO4, LO5]
The production department of Priston 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 9,000 10,000 11,000 8,000In 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 $17,100.
Each unit requires two pounds of raw material that costs $2.00 per pound. Management desires to end each quarter with a raw materials inventory equal to 20% of the following quarter’s production needs. The desired ending inventory for the 4th Quarter is 6,000 pounds. Management plans to pay for 70% of raw material purchases in the quarter acquired and 30% in the following quarter. Each unit requires 0.5 direct labor-hours and direct labor-hour workers are paid $14 per hour.
Required: 1a.Prepare the company’s direct materials budget for the upcoming fiscal year. (Do not round intermediate calculations. Input all amounts as positive values. Omit the "$" sign in your response.)
Priston CompanyDirect Materials Budget 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Year Production needs - pounds (Click to select)AddDeduct: (Click to select)Beginning inventoryEnding inventory Total needs - pounds (Click to select)AddDeduct: (Click to select)Beginning inventoryEnding inventory Raw materials to be purchased - pounds Cost of raw materials to be purchased $ $ $ $ $ 1b.
Prepare a schedule of expected cash disbursements for purchases of materials for the upcoming fiscal year. (Do not round intermediate calculations. Leave no cells blank - be certain to enter "0" wherever required. Omit the "$" sign in your response.)
Priston CompanySchedule of Expected Cash Disbursements for Materials 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Year Accounts payable, beginning balance $ $ $ $ $ 1st Quarter purchases 2nd Quarter purchases 3rd Quarter purchases 4th Quarter purchases Total cash disbursements for materials $ $ $ $ $ 2.
Complete the company's direct labor budget for the upcoming fiscal year, assuming that the direct labor 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. Omit the "$" sign in your response.)
Priston CompanyDirect Labor Budget 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Year Total direct labor-hours needed Total direct labor cost $ $ $ $ $
Explanation / Answer
Solution.
1b.
.
2.
Priston Company Direct Materials Budget Particulars 1st Quarter 2nd Quarter 3rd Quarter 4th Quarte Year Production needs - pounds 9,000 10,000 11,000 8,000 38,000 Closing inventory 2,000 2,200 1,600 6,000 11,800 - Total needs - pounds 11,000 12,200 12,600 35,800 71,600 Beginning Inventory (3,600) (2,000) (2,200) (1,600) (9,400) - Raw materials to be purchased - pounds 7,400 10,200 10,400 34,200 62,200 Cost of raw material 2 2 2 2 8 - Cost of raw materials to be purchased 14,800 20,402 20,802 56,004 112,008Related Questions
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