Inc. manufactures model airplane kits and projects production at 550,620,300, and 500 kits for the next four quarters.

Luther '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 Luther 's direct materials budget.

Luther, 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

Direct materials are

3 ounces of plastic per kit and the plastic costs $5 per ounce. Indirect materials are considered insignificant and are not included in the budgeting process. Beginning Raw Materials Inventory is 920 ounces and the company desires to end each quarter with 10 % of the materials needed for the next quarter's production. Luther desires a balance of 220 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 $ 30 per hour. Manufacturing overhead is allocated using direct labor hours as the allocation base. Variable overhead is $ 0.50 per kit, and fixed overhead is $ 170 per quarter.