Question

4. The direct materials needed for production are expected to be $500,000 for the first quarter, $600,000 for the 2nd quarter, and $640,000 for the third quarter. The company desires to have 10% of next quarter direct material needs on hand at the end of each quarter. How much are expected material purchases in the 2nd quarter?. Single choice.

A. $604,000

B. $64,000

C. $605,000

D. $506,000

5.A company plans to produce 15,000 units in the 1st quarter, and 20,000 units in the 2nd quarter. Each unit requires 3 labor hours. The labor rate is $20 per hour. Assume that the direct labor workforce is not adjusted each quarter. Instead, assume that the company’s direct labor workforce consists of permanent employees who are guaranteed to be paid for at least 50,000 hours of work each quarter. If the number of required direct labor-hours is less than this number, the workers are paid for 50,000 hours anyway. Any hours worked in excess of 50,000 hours in a quarter are paid at the rate of 1.5 times the normal hourly rate for direct labor. How much does the company pay in total for direct labor in both the 1st and the 2nd quarter? (sum up both quarters). Single choice.

A. $2,600,000

B. $2,200,000

C. $2,300,000

D. $2,000,000

6.A company expects to make purchases of $50,000 in the first quarter and $70,000 in the second quarter. The company expects that 60% of a quarter's purchases will be paid in the quarter of purchase, and 40% will be paid in the following quarter. What are the estimated cash disbursements related to purchases in the 2nd quarter?. Single choice.

A. $48,000

B. $72,000

C. $42,000

D. $62,000

Answer 1

	Ans 4.
	Quarter	Q1	Q2	Q3
a	Direct Materials needed for Production	$               500,000	$       600,000	$              640,000
b	Closing Direct Materials needed at hand =10% of next quraters need	$                 60,000	$         64,000	$                         -
c	Opening Direct Materials at Hand for Q2		$         60,000
d	Expected Materials purchase in Q2=a+b-c		604,000
	So Option A $604,000 is correct.

	Ans 5.
	Quarter	Q1	Q2	Total
	Planned Production units	15,000	20,000
	Labor Hours per unit	3	3
a	Estimated Labor Hrs Required per Qtr	45,000	60,000
b	No of Hrs to be paisd @$20 rate=	50,000	50,000
c	Total Mount to be paid @$20/Hr=b*20	$            1,000,000	$   1,000,000
d	No of Hrs to be paid @(20*1.5)=$30 per hr=a-b	-	10,000
e	Amount to be paid @$30/Hr=30*d	-	$       300,000
f	Total Direct Labor Paid in Quarter=c+e=	$           1,000,000	$   1,300,000	$           2,300,000
	So Total payment for Direct Labor in Q1 +Q2 =$2,300,000

	Ans 6.
	Quarter	Q1	Q2
	Quarterly purchases to be made	$                 50,000	$         70,000
	Paymnets for the purchases :
a	60% of the purchase paid in same Qtr =	$                 30,000	$         42,000
b	40% of the purchase paid in the enxt Qtr=		$         20,000
c	Total Cash disbursement in Q2=a+b=		$         62,000
	So Option D is correct.