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ACTG2020_Week8 Ch9_2014

# Budget lo 2 the direct materials budget at royal

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Unformatted text preview: At five are required per unit of product. are Management wants materials on hand at the Management end of each month equal to 10% of the 10% following month’s production. following On March 31, 13,000 pounds of material are On on hand. Material cost is \$0.40 per \$0.40 pound. pound. Let’s prepare the direct materials budget. Let’s LO 2 The Direct Materials Budget From production budget LO 2 The Direct Materials Budget LO 2 The Direct Materials Budget March 31 inventory 10% of following month’s production needs. Calculate the materials to be purchased in May. LO 2 The Direct Materials Budget LO 2 The Direct Materials Budget Assumed ending inventory LO 2 Expected Cash Disbursement for Materials Royal pays \$0.40 per pound for its Royal \$0.40 materials. materials. One-half of a month’s purchases is paid for One-half in the month of purchase; the other half is paid in the following month. paid The March 31 accounts payable balance is The \$12,000. \$12,000. Let’s calculate expected cash disbursements. disbursements. LO 2 Expected Cash Disbursement for Materials LO 2 Expected Cash Disbursement for Materials Compute the expected cash disbursements for materials for the quarter. 140,000 lbs. × \$.40/lb. = \$56,000 LO 2 Expected Cash Disbursement for Materials LO 2 The Direct Labour Budget Direct Materials Materials d te e Budget Budget pl Direct Labour Budget om C The direct labour budget is a detailed plan The showing labour requirements over some specific time period. time LO 2 The Direct Labour Budget At Royal, each unit of product requires 0.05 hours (3 At minutes) of direct labour. minutes) The Company has a “no layoff” policy so all employees The will be paid for 40 hours of work each week. will In exchange for the “no layoff” policy, workers agree to a In wage rate of \$10 per hour regardless of the hours worked (no overtime pay). (no For the next three months, the direct labour workforce will For be paid for a minimum of 1,500 hours per month. be Let’s prepare the direct labour budget. Let’s The Direct Labour Budget From production bu...
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