240000 pounds c 230000 pounds c d 211500 pounds d

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Unformatted text preview: 500 pounds d. 211,500 pounds 7-37 Quick Check How much materials should be purchased in How much materials should be purchased in May? May? a.. 221,500 pounds a 221,500 pounds b. 240,000 pounds b. 240,000 pounds c. 230,000 pounds c. 230,000 pounds d. 211,500 pounds d. 211,500 pounds 7-38 The Direct Materials Budget 7-39 The Direct Materials Budget Assumed ending Assumed inventory. inventory. 7-40 Expected Cash Disbursement for Materials • Royal pays $0.40 per pound for its materials. Royal per • One-half of a month’s purchases is paid for in the One-half month of purchase; the other half is paid in the following month. following • The March 31 accounts payable balance is The $12,000. $12,000. Let’s calculate expected cash disbursements. Let’s 7-41 Expected Cash Disbursement for Materials 7-42 Expected Cash Disbursement for Materials Compute the expected cash disbursements for materials for the quarter. 140,000 lbs. × $0.40/lb. = $56,000 7-43 Quick Check What are the total cash disbursements for the quarter? a. $185,000 a. b. $ 68,000 c. $ 56,000 d. $201,400 7-44 Quick Check What are the total cash disbursements for the quarter? a. $185,000 a. b. $ 68,000 c. $ 56,000 d. $201,400 7-45 Expected Cash Disbursement for Materials 7-46 Learning Objective 5 Prepare a direct labor budget. 7-47 The Direct Labor Budget • At Royal, each unit of product requires 0.05 hours (3 minutes) of direct labor. • The company has a “no layoff” policy so all employees will be paid for 40 hours of work each week. • For purposes of our illustration assume that Royal has a “no layoff” policy and workers are paid at the rate of $10 per hour regardless of the hours worked. • For the next three months, the direct labor workforce will be paid for a minimum of 1,500 hours per month. Let’s prepare the direct labor budget. Let’s 7-48 The Direct Labor Budget - From production budget. 7-49 The Direct Labor Budget - 7-50 The Direct Labor Budget - Greater of labor-hours required Greater of labor-hours required or labor-hours guaranteed. or labor-hours guaranteed. 7-51 The Di...
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