To prepare the direct materials budget and schedule of expected cash disbursements for materials:
Direct Materials Budget:
Quarterly Production Forecast:
Q1: 4,000 units
Q2: 5,000 units
Q3: 6,000 units
Q4: 7,000 units
Raw Materials Required for Production:
Q1: 4,000 units × 2 kg/unit = 8,000 kg
Q2: 5,000 units × 2 kg/unit = 10,000 kg
Q3: 6,000 units × 2 kg/unit = 12,000 kg
Q4: 7,000 units × 2 kg/unit = 14,000 kg
Raw Material Purchases:
Desired Ending Inventory:
Q2: 10% of 5,000 units × 2 kg/unit = 1,000 kg
Q3: 10% of 6,000 units × 2 kg/unit = 1,200 kg
Q4: 10% of 7,000 units × 2 kg/unit = 1,400 kg
Total Required Material:
Q1: Raw materials needed + Ending inventory - Beginning inventory = 8,000 kg + 1,000 kg - 1,400 kg = 7,600 kg
Q2: 10,000 kg + 1,200 kg - 7,600 kg = 3,600 kg
Q3: 12,000 kg + 1,400 kg - 3,600 kg = 9,800 kg
Q4: 14,000 kg + 1,500 kg - 9,800 kg = 5,700 kg
Cash Disbursements for Materials:
Payment for Purchases in the Quarter Acquired:
Q1: 7,600 kg × $1.40/kg = $10,640
Q2: 3,600 kg × $1.40/kg = $5,040
Q3: 9,800 kg × $1.40/kg = $13,720
Q4: 5,700 kg × $1.40/kg = $7,980
Direct Labour Budget:
Labour Hours Required:
Q1: 4,000 units × 0.60 hours/unit = 2,400 hours
Q2: 5,000 units × 0.60 hours/unit = 3,000 hours
Q3: 6,000 units × 0.60 hours/unit = 3,600 hours
Q4: 7,000 units × 0.60 hours/unit = 4,200 hours
Labour Cost:
Q1: 2,400 hours × $14/hour = $33,600
Q2: 3,000 hours × $14/hour = $42,000
Q3: 3,600 hours × $14/hour = $50,400
Q4: 4,200 hours × $14/hour = $58,800
This summary provides the direct materials budget, expected cash disbursements for materials, and the direct labour budget for each quarter of the upcoming fiscal year for Hareston Company.
The Complete Question
Preparing Direct Materials and Direct Labour Budgets [ \\( [\\mathrm{O} 2 \\) - CC7, 8] The production department of Hareston Company has submitted the following forecast of units to be produced by quarter for the upcoming fiscal year- In addition, the beginning raw materish inventory for the first quarter is budgeted to be 1,400 kilograms and the beginning accounts payable for the first quarter are budgeted to be \\( \\$ 2,940 \\). Each unit requires two kilograms of raw material that costs \\( \\$ 1.40 \\) per kilogram Management desires to end each quarter with an inventory of raw materials equal to \10
of the following quarter's production needs. The desired ending inventory for the fourth quarter is 1.500 kilograms. Management plans to pay for \80
of raw material purchases in the quarter acquired and \20
in the following quarter: Each unit requires 0.60 direct labour-hours, and direct labour-hour workers are paid \\$14 per hour. Required: 1. Prepare the company's direct materials budget and schedule of expected cash disbursements for materials for the upcoming fiscal year. 2. Prepare the company's direct labour budget for the upcoming fiscal year. assuming that the direct labour workforce is adjusted each quarter to match the number of hours required to produce the forecasted number of units produced.