Question

Austin, Inc., manufactures model airplane kits and projects production at 150, 620, 250, and 750 kits for the next four quarters A (Click the icon to view the manufacturing information.) Prepare Austin'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. Austin, Inc. Direct Materials Budget For the Year Ended December 31 First Second Third Fourth Quarter Quarter Quarter Quarter Total Budgeted kits to be produced i More Info Direct materials (ounces) per kit Direct materials needed for production Plus: Desired direct materials in ending inventory Total direct materials needed Less: Direct materials in beginning inventory Budgeted purchases of direct materials Direct materials cost per ounce Direct materials are 7 ounces of plastic per kit and the plastic costs $1 per ounce. Indirect materials are considered insignificant and are not included in the budgeting process. Beginning Raw Materials Inventory is 900 ounces, and the company desires to end each quarter with 30% of the materials needed for the next quarter's production. Austin desires a balance of 300 ounces in Raw Materials Inventory at the end of the fourth quarter. Each kit requires 0.25 hours of direct labor at an average cost of $30 per hour. Manufacturing overhead is allocated using direct labor hours as the allocation base. Variable overhead is $0.80 per kit, and fixed overhead is $140 per quarter. Budgeted cost of direct materials purchases Choose from any list or enter any number in the input fields and then click Check Answer. parts remaining Print Done Done Clear All

Answer 1

Direct materials budget contains the details about the beginning inventory, closing inventory , units sent into production and processed. This contains the budget that would be used in acquisition of direct materials over a period of time.

Austin Inc

Direct Materials Budget

For the year ended December 31

	First Quarter	Second Quarter	Third Quarter	Fourth Quarter	Total
Budgeted kits to be produced	150	620	250	750	1,770
Direct materials ounces per kit	7	7	7	7	7
Direct materials needed for production	1,050	4,340	1,750	5,250	12,390
Plus: Desired DM in ending inventory	1,302	525	1,575	300	300
Total direct materials needed	2,352	4,865	3,325	5,550	12,690
Less: DM in beginning inventory	900	1,302	525	1,575	900
Budgeted purchases of direct materials	1,452	3,563	2,800	3,975	11,790
X   Direct materials cost per ounce	1	1	1	1	1
Budgeted cost of direct materials purchases	$            1,451	$                  3,562	$              2,799	$                 3,974	$        11,789

Working Note

	Desired closing inventory = 30% X next quarter materials for prodn
1st quarter	30% X 4340 = 1302
2nd quarter	30% X 1750 = 525
3rd quarter	30% X 5250 = 1575
4th quarter	Given = 300