Answer:
1 & 2. Purchases of Raw Material
Purchases in grams Cost
Quarter 1 68,250 $ 81,900
Quarter 2 82,250 $ 98,700
Quarter 3 75,250 $ 90,300
Quarter 4 60,500 <u>$ 72,600</u>
Full year $ 343.500
3. Expected Cash disbursements
Quarter 1 $ 54,740
Quarter 2 $ 91,980
Quarter 3 $ 93.660
Quarter 4 <u>$ 79,680</u>
Total Year payments $ 320,060
4. Total cost of Direct Labor
Quarter 1 $ 27,900
Quarter 2 $ 37,200
Quarter 3 $ 34,100
Quarter 4 <u>$ 31,000</u>
Total Year for direct labor $ 130,200
Explanation:
Computation of raw material purchases
<u>Raw material consumption</u>
Qtr No of Units per qtr Total Requirement
1 9,000 * 7 gms per unit = 63,000 gms
2 12,000 * 7 gms per unit = 84,000 gms
3 11,000 * 7 gms per unit = 77,000 gms
4 10,000 * 7 gms per unit = <u>70,000</u> gms
Total Year 294,000 gms
Raw Material Purchases for each quarter
Purchases = Closing inventory + Consumption - Opening inventory
1 21,000 (84,000gms * 25 % ) + 63,000 - 15.750 = 68,250 gms
2 19,250 (77,000gms* 25 %) + 84,000 - 21,000 = 82,250 gms
3 17,500 ( 70,000gms* 25 %) + 77,000-19,250 = 75,250 gms
4 8,000 ( As per data) + 70,000-17.500 = 60,500 gms
Total year purchases = = 286,250 gms
<u>Cost of purchases</u>
Quarter 1 68,250 gms * $ 1.20 = $ 81,900
Quarter 2 82,250 gms * $ 1.20 = $ 98,700
Quarter 3 75,250 gms * $ 1,20 = $ 90,300
Quarter 4 60,500 gms * $ 1,20 = <u>$ 72,600</u>
Total purchases $ 343,500
Computation of cash disbursements for purchases
Quarter 1 Payments = Opening Payables + 60 % of quarter 1
$ 5,600 + ( 60 %* $ 81,900) = $ 5,600 + $ 49,140 = $ 54,740
Quarter 2 payments
(40 % of quarter 1) + ( 60 % of quarter 2)
($ 81,900 * 40 %) + ( $ 98,700 * 60 %)
$ 32,760 + $ 59,220 = $ 91,980
Quarter 3 payments
(40 % of quarter 2) + ( 60 % of quarter 3)
($ 98,700 * 40 %) + ( $ 90,300 * 60 %)
$ 39,480 + $ 54,180 = $ 93.660
Quarter 4 payments
(40 % of quarter 3) + ( 60 % of quarter 4)
($ 90,300 * 40 %) + ( $ 72,600 * 60 %)
$ 36,120 + $ 43,560 = <u> $ 79,680</u>
Total payments for purchases for the year $ 320,060
Computation of direct labor cost
No of units * Estimated Direct labor hours * Labor rate per hour
Quarter 1 = 9,000 * 0.20 per unit * $ 15.50 = $ 27.900
Quarter 2 = 12,000 * 0.20 per unit * $ 15.50 = $ 37.200
Quarter 3 11,000 * 0.20 per unit * $ 15.50 = $ 34.100
Quarter 4 10,000 * 0.20 per unit * $ 15.50 = <u>$ 31.000</u>
Total cost for Direct labour $ 130,200
