Question

Luther, Inc. manufactures model airplane kits and projects production at 550, 450, 400, and 300 kits for the next four quarters (Click the icon to view the manufacturing information.) Prepare Luther's direct materials budget direct labor budget, and manufacturing overhead budget for the year. Round the direct labor hours needed for production, budgeted overhead costs, and predetermined overhead allocation rate to two decimal places. Round other amounts to the nearest whole number

Answer 1

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Luther Inc.
Direct Materials Budget	Qtr. 1	Qtr. 2	Qtr. 3	Qtr. 4	Total	Note
Production Budget	550.00	450.00	400.00	300.00	1,700.00	A
Direct Material (Ounces) per kit	5.00	5.00	5.00	5.00		B
Direct Material needed for production	2,750.00	2,250.00	2,000.00	1,500.00	8,500.00	C=A*B
Add: Closing Material Inventory	450.00	400.00	300.00	280.00		D= 20% of C of next month. For Qtr. 4 its given in the question.
Total Direct Material needed	3,200.00	2,650.00	2,300.00	1,780.00		E=C+D
Less: Opening Material Inventory	890.00	450.00	400.00	300.00		F= 20% of C of same month. For Qtr. 1 its given in the question.
Budgeted Purchases of Direct Material	2,310.00	2,200.00	1,900.00	1,480.00	7,890.00	G=E-F
Direct Material cost per ounce	2.00	2.00	2.00	2.00		H
Budgeted cost of Direct Material Purchases	4,620.00	4,400.00	3,800.00	2,960.00	15,780.00	I=G*H
Direct Labor Budget	Qtr. 1	Qtr. 2	Qtr. 3	Qtr. 4	Total
Production Budget	550.00	450.00	400.00	300.00	1,700.00	See A
Direct labor hours per kit	0.50	0.50	0.50	0.50		J
Direct labor hours needed for production	275.00	225.00	200.00	150.00	850.00	K=A*J
Direct labor cost hour	55.00	55.00	55.00	55.00		L
Budgeted Direct labor cost	15,125.00	12,375.00	11,000.00	8,250.00	46,750.00	M=K*L
Manufacturing overhead Budget	Qtr. 1	Qtr. 2	Qtr. 3	Qtr. 4	Total
Production Budget	550.00	450.00	400.00	300.00	1,700.00	See A
VOH per kit	0.25	0.25	0.25	0.25		N
Budgeted VOH	137.50	112.50	100.00	75.00	425.00	O=A*N
Budgeted FOH	140.00	140.00	140.00	140.00	560.00	P
Budgeted Manufacturing overhead cost	277.50	252.50	240.00	215.00	985.00	Q=O+P
Direct labor hours needed for production	275.00	225.00	200.00	150.00	850.00	See K
Budgeted Manufacturing overhead cost					985.00	See Q
Predetermined overhead allocation rate					1.16	R=Q/K