Inc. manufactures model airplane kits and projects production at 150, 270, 350, and 700 kits for the next four quarters.

Prepare Kevin'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.

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 930 ounces, and the company desires to end each quarter with 30% of the materials needed for the next quarter's production. Kelvin desires a balance of 210 ounces 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 $ 40per hour. Manufacturing overhead is allocated using direct labor hours as the allocation base. Variable overhead is $ 0.75 per kit, and fixed overhead is $ 175per quarter.

Begin by preparing

KelvinKelvin's

direct materials budget.

Kelvin, Inc.
Direct Materials Budget
For the Year Ended December 31
		First	Second	Third	Fourth
		Quarter	Quarter	Quarter	Quarter	Total
Direct materials (ounces) per kit
Direct materials needed for production
Plus:
Total direct materials needed
Less:
Budgeted purchases of direct materials
Direct materials cost per ounce
Budgeted cost of direct materials purchases

Prepare the direct labor budget. (Enter any hours as a decimal to two places, X.XX, and round all other amounts to the nearest whole number.)

Kelvin, Inc.
Direct Labor Budget
For the Year Ended December 31
		First	Second	Third	Fourth
		Quarter	Quarter	Quarter	Quarter	Total
Direct labor hours needed for production
Budgeted direct labor cost

Prepare the manufacturing overhead budget. (Enter all costs and hours as a decimal to two places, X.XX. Abbreviations used: VOH = variable manufacturing overhead; FOH = fixed manufacturing overhead.)

Kelvin, Inc.
Manufacturing Overhead Budget
For the Year Ended December 31
		First	Second	Third	Fourth
		Quarter	Quarter	Quarter	Quarter	Total
VOH cost per kit
Budgeted VOH
Budgeted FOH
Budgeted manufacturing overhead costs
Direct labor hours
Budgeted manufacturing overhead costs
Predetermined overhead allocation rate