Kelvin, Inc. manufactures model airplane kits and projects production at 550,270,300, and 700 kits for the next four quarters. Click the icon to view the manufacturing information.) decimal places. Round other amounts to the nearest whole number. Begin by preparing Kelvin's direct materials budget. More info Direct materials are two 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 20% of the materials needed for the next quarter's production. Kelvin desires a balance of 270 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 $50 per hour. Manufacturing overhead is allocated using direct labor hours as the allocation base. Variable overhead is $0.30 per kit, and fixed overhead is $175 per quarter