Question

Preston, Inc., manufactures model airplane kits and projects production at 300, 420, 650, and 550 kits for the next four quarters Click the icon to view the manufacturing information.) Prepare Preston'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 Begin by preparing Preston's direct * More Info Direct materials are 3 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 860 ounces, and the company desires to end each quarter with 10% of the materials needed for the next quarter's production Preston desires a balance of 240 ounces in Raw Materials Inventory at the end of the fourth quarter. Each kit requires 0.50 hours of direct labor at an average cost of 522 per hour. Manufacturing overhead is allocated using direct labor hours as the allocation base. Variable overhead is $0.40 per kit, and fixed overhead is $160 per quarter Direct materials (ounces) per kit Direct materials needed for product Plus Total direct materials needed Print Done Loss Budgeted purchases of direct materials Direct materials cost per ounce Choose from any list or enter any number in the input fields and then continue to the next question

Answer 1

		Direct materials budget
				First quarter	Second quarter	Third quarter	Fourth quarter	Total
Budgeted production (in kits)			a	300	420	650	550
Direct material (ounces) per kit			b	3	3	3	3
Direct materials needed for production			c=a*b	900	1260	1950	1650	5760
Plus: Desired ending inventory				126	195	165	240
(10% of materials needed for next quarter's production)				(1260*10%)	(1950*10%)	(1650*10%)	(given)
Total direct materials needed				1026	1455	2115	1890
Less: Beginning inventory				860	126	195	165
(Ending inventory of last quarter)				(given)
Budgeted purchase of direct materials			d	166	1329	1920	1725	5140
Direct material cost per ounce in $			e	1	1	1	1
Budgeted cost of direct materials purchases			f=d*e	166	1329	1920	1725	5140
		Direct labor budget
				First quarter	Second quarter	Third quarter	Fourth quarter	Total
Budgeted production (in kits)			a	300	420	650	550
Direct labor hours per kit			b	0.5	0.5	0.5	0.5
Direct labor hours needed for production			c=a*b	150	210	325	275
Direct labor cost per hour			d	22	22	22	22
Budgeted direct labor cost			e=c*d	3300	4620	7150	6050	21120
		Manufacturing overhead budget
				First quarter	Second quarter	Third quarter	Fourth quarter	Total
Budgeted production (in kits)			a	300	420	650	550
VOH cost per kit			b	0.4	0.4	0.4	0.4
Budgeted VOH			c=a*b	120	168	260	220	768
Budgeted FOH			d	160	160	160	160	640
Budgeted manufacturing overhead costs			e=c+d	280	328	420	380	1408
Direct labor hours		(From direct labor budget)	f	150	210	325	275	960
Budgeted manufacturing overhead costs			g					1408
Predetermined overhead allocation rate			h=g/f					1.47