Question

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 5,000 6,000 7,000 4,000 In addition, the beginning raw materials inventory for the 1st Quarter is budgeted to be 1,500 pounds and the beginning accounts payable for the 1st Quarter is budgeted to be $9,500. 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 15% of the following quarter’s production needs. The desired ending inventory for the 4th Quarter is 3,000 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 $10 per hour. Required:

1a. Prepare the company’s direct materials budget for the upcoming fiscal year.

1b.	Prepare a schedule of expected cash disbursements for purchases of materials for the upcoming fiscal year.
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. (Round "DL hours per unit" answers to 2 decimal places.)

Answer 1

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