Question

E8-11 - Please explain how you arrived at your answers.Thank you!

Exercise 8-11 Direct Materials and Direct Labor Budgets [LO4,LO5]

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 beproduced	9,000	10,000	11,000	8,000

In addition, the beginning raw materials inventory for the 1stQuarter is budgeted to be 3,600 pounds and the beginning accountspayable for the 1st Quarter is budgeted to be $17,100.

Each unit requires two pounds ofraw material that costs $2.00 per pound. Management desires to endeach quarter with a raw materials inventory equal to 20% of thefollowing quarter’s production needs. The desired ending inventoryfor the 4th Quarter is 6,000 pounds. Management plans to pay for70% of raw material purchases in the quarter acquired and 30% inthe following quarter. Each unit requires 0.5 direct labor-hoursand direct labor-hour workers are paid $14 per hour.

Required:
1a.	Prepare the company’s direct materials budget for the upcomingfiscal year. (Do not round intermediate calculations. Inputall amounts as positive values. Omit the "$" sign in yourresponse.)

Priston Company Direct Materials Budget
	1st Quarter	2nd Quarter	3rd Quarter	4th Quarter	Year
Production needs -pounds
(Click toselect)AddDeduct: (Click to select)Beginning inventoryEndinginventory
Total needs -pounds
(Click toselect)AddDeduct: (Click to select)Beginning inventoryEndinginventory
Raw materials to bepurchased - pounds
Cost of rawmaterials to be purchased	$	$	$	$	$

1b.	Prepare a schedule of expected cash disbursements for purchasesof materials for the upcoming fiscal year. (Do not roundintermediate calculations. Leave no cells blank - be certain toenter "0" wherever required. Omit the "$" sign in yourresponse.)

Priston Company Schedule of Expected Cash Disbursements for Materials
	1st Quarter	2nd Quarter	3rd Quarter	4th Quarter	Year
Accounts payable,beginning balance	$	$	$	$	$
1st Quarterpurchases
2nd Quarterpurchases
3rd Quarterpurchases
4th Quarterpurchases
Total cashdisbursements 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. (Do not roundintermediate calculations. Omit the "$" sign in yourresponse.)

Priston Company Direct Labor Budget
	1st Quarter	2nd Quarter	3rd Quarter	4th Quarter	Year
Total directlabor-hours needed
Total direct laborcost	$	$	$	$	$