Question

Other data for Grady Tire Compar (Click the icon to view the oth Read the requirements. The Grady Tire Company manufactures racing tires for bicycles. Grady sells tires for $70 each. Grady is planning for the next year by developing a master budget by quarters. Grady's balance sheet for December 31, 2018, follows: (Click the icon to view the balance sheet.) Review the direct labor budget you prepared above. Grady Tire Company Manufacturing Overhead Budget For the Year Ended December 31, 2019 First Second Third Fourth Quarter Quarter Quarter Quarter Total VOH cost per tire Budgeted VOH Budgeted FOH Choose from any list or enter any number in the input fields and then click Check Answer.

Answer 1

Working to calculate units to be produced and labor hours required:

	First	Second	Third	Fourth
	Quarter	Quarter	Quarter	Quarter	Total
Budeted Sales	1,100	1,350	1,600	1,850	5,900
Add: Desired Ending Inventory	540	640	740	840	840
Total requirement	1,640	1,990	2,340	2,690	6,740
Less: Beginning Inventory	300	540	640	740	300
Goods to be produced	1,340	1,450	1,700	1,950	6,440
Labor Hours per Unit	0.50	0.50	0.50	0.50	0.50
Direct Labor Hours for production	670	725	850	975	3,220

MANUFACTURING OVERHEAD BUDGET

	First	Second	Third	Fourth
	Quarter	Quarter	Quarter	Quarter	Total
Units to be produced	1,340	1,450	1,700	1,950	6,440
VOH cost per tire	$ 3	$ 3	$ 3	$ 3	$ 3
Budgeted VOH	$           4,020	$           4,350	$           5,100	$           5,850	$          19,320
Budgeted FOH
Depreciation	$           3,000	$           3,000	$           3,000	$           3,000	$          12,000
Utilities, Insurance and property taxes	$         22,760	$         22,760	$         22,760	$         22,760	$          91,040
Total Budgeted FOH	$         25,760	$         25,760	$         25,760	$         25,760	$ 103,040
Budgeted Manufacturing Overhead Costs	$         29,780	$         30,110	$         30,860	$         31,610	$ 122,360
Direct Labor Hours	670	725	850	975	3,220
Budgeted Manufacturing Overhead Costs					$ 122,360
Predetermined Overhead Allocation Rate					$                 38

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