The production department of Harrison Company has submitted the following forecast of units to be produced by quarter for the upcoming year 2017: Quarter 1 Quarter 2 Quarter 3 Quarter 4 Units to be produced 7,000 8,000 6,000 5,000 Additional information: 1. The beginning inventory for the first quarter is budgeted to be 1,400 units. 2. Each unit requires 2 kg of material X that costs RM1.40 per kg. 3. Management desires to end of each quarter with an inventory of material X equal to 10% of the following quarter's production needs. 4. The desired ending inventory of material X for the fourth quarter is 1,500 kg. 5. Each unit requires 0.60 direct labour hours and direct labours are paid RM14 per hour. Required: a. Prepare the company's direct materials budget for each quarter. b. Prepare the company's direct labour budget for each quarter.
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
![The production department of Harrison Company has submitted the following forecast of units to be produced by
quarter for the upcoming year 2017:
Quarter 1
Quarter 2
Quarter 3
Quarter 4
Units to be produced
7,000
8,000
6,000
5,000
Additional information:
1. The beginning inventory for the first quarter is budgeted to be 1,400 units.
2. Each unit requires 2 kg of material X that costs RM1.40 per kg.
3. Management desires to end of each quarter with an inventory of material X equal to 10% of the following quarter's
production needs.
4. The desired ending inventory of material X for the fourth quarter is 1,500 kg.
5. Each unit requires 0.60 direct labour hours and direct labours are paid RM14 per hour.
Required:
a. Prepare the company's direct materials budget for each quarter.
b. Prepare the company's direct labour budget for each quarter.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F844cc5cb-6b56-4f6a-9fe6-e91792bc1e68%2F06ba9077-9683-4646-9aa3-38bc0314846b%2F4tgjoj_processed.jpeg&w=3840&q=75)
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