Oliver, Inc. manufactures model airplane kits and projects production at 550,420,400, and 500 kits for the next four quarters. (Click the icon to view the manufacturing information.) Prepare Oliver'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, a Begin by preparing Oliver's direct materials budget. Direct materials are two ounces of plastic per kit and the plastic costs $3 per ounce. Indirect materials are considered insignificant and are not included in the budgeting process. Beginning Raw Materials Inventory is 890 ounces, and the company desires to end each quarter with 30% of the materials needed for the next quarter's production. Oliver desires a balance of 230 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 $35 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 $125 per quarter