Rida, Inc., a manufacturer in a seasonal industry, is preparingits direct materials budget for the second quarter. It plansproduction of 237,000 units in the second quarter and 274,500 unitsin the third quarter. Raw material inventory is 64,500 pounds atthe beginning of the second quarter. Other information follows:
Direct materials Each unit requires 0.50 poundsof a key raw material, priced at $187 per pound. The company plansto end each quarter with an ending inventory of materials equal to60% of next quarterâs budgeted materials requirements.
Prepare a direct materialsbudget for the second quarter.
Rida, Inc., a manufacturer in a seasonal industry, is preparingits direct materials budget for the second quarter. It plansproduction of 237,000 units in the second quarter and 274,500 unitsin the third quarter. Raw material inventory is 64,500 pounds atthe beginning of the second quarter. Other information follows: |
| Direct materials | Each unit requires 0.50 poundsof a key raw material, priced at $187 per pound. The company plansto end each quarter with an ending inventory of materials equal to60% of next quarterâs budgeted materials requirements. |
| Prepare a direct materialsbudget for the second quarter. |
Related questions
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:____________________ _______________________
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 | $ | $ | $ | $ | $ |
E8-11 - Please explain how you arrived at your answers.Thank you!
| Exercise 8-11 Direct Materials and Direct Labor Budgets [LO4,LO5]
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