ACCTG 101 Lecture Notes - Lecture 26: Activity-Based Costing, Cash Flow
Document Summary
Get access
Related Documents
Related Questions
The production department of Priston Company has submitted thefollowing forecast of units to be produced by quarter for theupcoming fiscal year.
| 1stQuarter | 2ndQuarter | 3rdQuarter | 4thQuarter | |
| Units to be produced | 10,000 | 11,000 | 12,000 | 9,000 |
In addition, the beginning raw materials inventory for the 1stQuarter is budgeted to be 5,000 pounds and the beginning accountspayable for the 1st Quarter is budgeted to be $19,000. |
Each unit requires two pounds ofraw material that costs $4.00 per pound. Management desires to endeach quarter with a raw materials inventory equal to 25% of thefollowing quarterâs production needs. The desired ending inventoryfor the 4th Quarter is 6,750 pounds. Management plans to pay for60% of raw material purchases in the quarter acquired and 40% inthe following quarter. Each unit requires 0.75 direct labor-hoursand direct labor-hour workers are paid $13 per hour. |
| Required: | |
| 1a. | Prepare the companyâs direct materials budget for the upcomingfiscal year. (Input all amounts as positive values. Do notround intermediate calculations.) |
| Priston Company Direct Materials Budget | |||||
| 1st Quarter | 2nd Quarter | 3rd Quarter | 4th Quarter | Year | |
| Production needs - pounds | |||||
| (Click to select)DeductAdd: (Click to select)BeginninginventoryEnding inventory | |||||
| Total needs - pounds | |||||
| (Click to select)AddDeduct: (Click to select)EndinginventoryBeginning inventory | |||||
| Rawmaterials to be purchased - pounds | |||||
| Costof raw materials to be purchased | $ | $ | $ | $ | $ |
| 1b. | Prepare a schedule of expected cash disbursements for purchasesof materials for the upcoming fiscal year. (Leave no cellsblank - be certain to enter "0" wherever required. Do not roundintermediate calculations.) |
| Priston Company Schedule of Expected Cash Disbursements for Materials | |||||
| 1st Quarter | 2nd Quarter | 3rd Quarter | 4th Quarter | Year | |
| Accounts payable, beginning balance | $ | $ | $ | $ | $ |
| 1stQuarter purchases | |||||
| 2ndQuarter purchases | |||||
| 3rdQuarter purchases | |||||
| 4thQuarter purchases | |||||
| Total cash disbursements for materials | $ | $ | $ | $ | $ |
| 2. | Complete the company's direct labor budget for the upcomingfiscal year, assuming that the direct labor workforce is adjustedeach quarter to match the number of hours required to produce theforecasted number of units produced. |
| Priston Company Direct Labor Budget | |||||
| 1st Quarter | 2nd Quarter | 3rd Quarter | 4th Quarter | Year | |
| Total direct labor-hours needed | |||||
| Total direct labor cost | $ | $ | $ | $ | $ |
Tonga Toys manufactures and distributes a number of products toretailers. One of these products, Playclay, requires five pounds ofmaterial A135 in the manufacture of each unit. The company is nowplanning raw materials needs for the third quarterâJuly, August,and September. Peak sales of Playclay occur in the third quarter ofeach year. To keep production and shipments moving smoothly, thecompany has the following inventory requirements:
| a. | The finished goods inventory on hand at the end of each monthmust be equal to 3,000 units plus 35% of the next monthâs sales.The finished goods inventory on June 30 is budgeted to be 17,350units. |
| b. | The raw materials inventory on hand at the end of each monthmust be equal to one-half of the following monthâs production needsfor raw materials. The raw materials inventory on June 30 formaterial A135 is budgeted to be 111,250 pounds. |
| c. | The companymaintains no work in process inventories. |
| A sales budgetfor Playclay for the last six months of the year follows. |
| BudgetedSales in Units | |
| July | 41,000 |
| August | 51,000 |
| September | 71,000 |
| October | 36,000 |
| November | 21,000 |
| December | 11,000 |
| Required: | |
| 1. | Prepare a production budget for Playclay for the months July,August, September, and October. (Input all amounts aspositive values. Do not round intermediatecalculations.) |
| Playclay Production Budget | ||||
| July | August | September | October | |
| Budgeted sales | ||||
| (Click to select)AddDeduct: (Click to select)BeginninginventoryEnding inventory | ||||
| Total needs | ||||
| (Click to select)DeductAdd: (Click to select)BeginninginventoryEnding inventory | ||||
| Required production | ||||
| 3. | Prepare a direct materials budget showing the quantity ofmaterial A135 to be purchased for July, August, and September andfor the quarter in total. (Input all amounts as positivevalues. Do not round intermediate calculations.) |
| Playclay Direct Materials Budget | ||||
| July | August | September | Third Quarter | |
| Production needs | ||||
| (Click to select)AddDeduct: (Click to select)EndinginventoryBeginning inventory | ||||
| Total Material A135 needs | ||||
| (Click to select)DeductAdd: (Click to select)BeginninginventoryEnding inventory | ||||
| Material A135 purchases | ||||
PLEASE SHOW WORK
On January 1, 2014, the Hardin Company budget committee hasreached agreement on the following data for the 6 months endingJune 30, 2014.
| Sales units: | First quarter 5,000; second quarter 6,000; third quarter7,000 | |
| Ending raw materials inventory: | 40% of the next quarterâs production requirements | |
| Ending finished goods inventory: | 25% of the next quarterâs expected sales units | |
| Third-quarter production: | 7,200 units |
The ending raw materials and finished goods inventories at December31, 2013, follow the same percentage relationships to productionand sales that occur in 2014. 3 pounds of raw materials arerequired to make each unit of finished goods. Raw materialspurchased are expected to cost $4 per pound.
1quarter 2quarter
Expected Unit Sales: ___________________________________________
Add Desired Ending Finished GoodsUnit:____________________ _______________________
Total Required Units: ___________________________________________
Less Begining Finished Goods Unit: ___________________________________________
Required Production Units: ___________________________________________
Prepare a direct materials budget by quarters for the 6-monthperiod ended June 30, 2014.
Units to be Produced: ___________________________________________
Direct Materials per unit: ___________________________________________
Total Pounds Needed for Production: ___________________________________________
Add: Desired Ending Direct Materials____________________ _______________________
Total Materials Required: ___________________________________________
Less Beginning Direct Materials: ___________________________________________
Direct Materials Purchases: ___________________________________________
Cost Per Pound: ___________________________________________
Total Cost of Direct Materials Purchases:____________________ _______________________
