Question

Grady, Inc. manufactures model airplane kits and projects production at 550, 530, 400, and 550 kits for the next four quarters. Direct materials are $12 per kit. Indirect materials are considered insignificant and are not included in the budgeting process. Beginning Raw Materials Inventory is $600, and the company desires to end each quarter with 30% of the materials needed for the next quarter's production. Grady desires a balance of $600 in Raw Materials Inventory at the end of the fourth quarter. Each kit requires 0.75 hours of direct labor at an average cost of $20 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 $165 per quarter. Prepare Grady'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 Grady's direct materials budget Grady, Inc. Direct Materials Budget For the Year Ended December 31 First Second Third Fourth Quarter Quarter Quarter Quarter Total Direct materials cost per unit Direct materials needed for production Plus: Total direct materials needed Less: Budgeted purchases of direct materials

Answer 1

550 159) 7090 1 Direct Material needed for production 2 Add: Materail at the end of each quarter 3 Total Direct Material needed (1+2 4 Less: Opening Material at each quarter beginn 5 Budgeted Purchase of Materials (3-4) 6 Direct Material cost per units 7 Cost of Material Purchased (5*6) 530 120 650 159 491 12 5,892 400 165 565 1201 445 12 5,340 $ 659 12 7,908 435 12 5,220 $ $ $

Grady's Material Budget is given as above