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Posted by: Annie kavitha
Price Quoted by Student: $6
Posted On: 2011-04-05 04:04:26

Exercise 7-15 Direct Materials and Direct Labor Budgets


Exercise 7-15 Priston Company


The production department of Priston Company has submitted the following forecast of units to be produced by quarter for the upcoming fiscal year.


1st Quarter

2nd Quarter

3rd Quarter

4th Quarter

Units to be produced






In addition, the beginning raw materials inventory for the first quarter is budgeted to be 3,600 pounds and the beginning accounts payable for the first quarter is budgeted to be $11,775. Each unit requires 3 pounds of raw material that costs $2.50 per pound.  Management desires to end each quarter with an inventory of raw materials equal to 20% of the following quarter’s production needs.  The desired ending inventory for the fourth quarter is 3,700 pounds.  Management plans to pay 70% of raw material purchases in the quarter acquired and 30% in the following quarter.  Each unit requires 0.50 direct labor-hours and direct labor-hour workers are paid $12.00 per hour.



1.  Prepare the company’s direct materials budget and schedule of expected cash disbursements for purchases of materials for the upcoming fiscal year.

2.  Prepare the company’s direct labor budget for the upcoming fiscal year, assuming that the direct labor workforce is adjusted each quarter to match the number of hours required to produce the forecasted number of units produced.


1.  Prepare the company’s direct materials
Price $6
Attachment 1: Exercise 7-15 Priston Company.doc
Solution Posted By: Annie kavitha    Posted on: 05-04-2011