Luther, Inc. manufactures model airplane kits and projects production at 450, 530, 200, and 300 kits per quarter. Direct materials are $ 9 per kit. Indirect materials are considered insignificant and are not included in the budgeting process. Beginning Raw Materials Inventory is $ 200, 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 $ 200 in Raw Materials Inventory at the end of the fourth quarter. Each kit requires 0.50 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 $ 0.70 per kit and fixed overhead is $ 145 per quarter.

Prepare 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.

Total Luther, Inc. Direct Materials Budget For the Year Ended December 31 First Second Third Quarter Quarter Quarter Budgeted kits to be produced 450 530 200 Direct materials cost per unit 9 $ 9 | $ Direct materials needed for production 4,050 $ 4,770 $ 1,800 || $ Plus: Desired direct materials in ending inventory Total direct materials needed Less: Direct materials in beginning inventory 200 Fourth Quarter 300 9 $ 1,480 CA $ $ 2,700 $ 200 13,320 200 2,900 13,520 200 13,320 Budgeted purchases of direct materials