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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 $ 72,600
Full year $ 343.500
3. Expected Cash disbursements
Quarter 1 $ 54,740
Quarter 2 $ 91,980
Quarter 3 $ 93.660
Quarter 4 $ 79,680
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 $ 31,000
Total Year for direct labor $ 130,200
Explanation:
Computation of raw material purchases
Raw material consumption
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 = 70,000 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
Cost of purchases
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 = $ 72,600
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 = $ 79,680
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 = $ 31.000
Total cost for Direct labour $ 130,200
Production is the term that is referred to as the process of utilizing all the raw materials combining them and then producing a final finished product for the consumption of the customers. It is the act of producing the product for maintaining the balance between the demand and the supply.
The computation of the answers for the sub-parts:
For the aggregate data, the table has been attached below.
Computation of raw material purchases
Raw material consumption:
[tex]\text{No of Units} \times \text{per quantity}= \text{Total Requirement}[/tex]
[tex]9,000 \times 7\: \text{gms per unit} = 63,000\:gms \\12,000 \times 7 \text{gms per unit} = 84,000 \:gms \\ 11,000 \times 7 \text{gms per unit }= 77,000\: gms \\10,000 \times 7 \:\text{gms per unit} = 70,000\: gms[/tex]
Total Year of purchases =294,000 gms
Raw Material Purchases for each quarter
Purchases = Closing inventory + Consumption - Opening inventory
[tex]21,000 \times (84,000\:gms \times 25\% ) + 63,000 - 15.750 = 68,250 \:gms[/tex]
[tex]19,250 \times (77,000\:gms\times 25\%) + 84,000 - 21,000 = 82,250\: gms[/tex]
[tex]17,500\times ( 70,000\:gms\times 25\%) + 77,000-19,250 = 75,250\: gms[/tex]
[tex]8,000 + 70,000-17.500 = 60,500 \:gms[/tex]
Total year purchases =286,250 gms
Cost of purchases
[tex]Quarter \:1 \: \: 68,250\: gms \times\ $ 1.20 = \$ 81,900Quarter \:2 \: \:82,250 \:gms \times\$ 1.20 = \$ 98,700Quarter \:3\: \:75,250 \:gms \times \$ 1,20 = \ $ 90,300Quarter\: 4\: \: 60,500 \:gms \times \$ 1,20 = \ $ 72,600[/tex]
Total purchases= $ 343,500
Computation of cash disbursements for purchases
Quarter 1 Payments = Opening Payables + 60 % of quarter 1
[tex]\$ 5,600 + ( 60\%\times\ $ 81,900) =\$ 5,600 +\ $ 49,140 = \ $ 54,740[/tex]
Quarter 2 payments
(40 % of quarter 1) + ( 60 % of quarter 2)
[tex](\$ 81,900 \times 40\%) + ( \$ 98,700 \times 60 \%)\: \$ 32,760 + \$ 59220= \$ 91,980[/tex]
Quarter 3 payments
(40 % of quarter 2) + ( 60 % of quarter 3)
[tex](\$ 98,700 \times 40\%) + (\ $ 90,300 \times 60\%)\:\$ 39,480 + \$ 54,180=\ $ 93.660[/tex]
Quarter 4 payments
(40 % of quarter 3) + ( 60 % of quarter 4)
[tex](\$ 90,300 \times40\%) + ( \$ 72,600 \times 60\%)\:\$ 36,120 + \$ 43,560= \$ 79,680[/tex]
Total payments for purchases for the year= $ 320,060
Computation of direct labour cost
[tex]\text{No of units} \times \text{Estimated Direct labor hours} \times \text{Labor rate per hour}[/tex]
[tex]Quarter\: 1\: = 9,000 \times 0.20\: per \:unit \times \$ 15.50 = \$ 27.900Quarter \:2 \: = 12,000 \times 0.20\: per\: unit \times \$ 15.50 = \$ 37.200Quarter\: 3 \: = 11,000 \times 0.20 \:per\: unit \times \$ 15.50 = \$ 34.100Quarter \:4\: = 10,000 \times 0.20\: per\: unit \times \$ 15.50 = \$ 31.000[/tex]
Total cost for Direct labour= $ 130,200
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