Preston, Inc. manufactures model airplane kits and projects production at 500,270,250, and 750 kits for the next four quarters. (i) (Click the icon to view the manufacturing information.) number. Begin by preparing Preston's direct materials budget. More info Direct materials are two ounces of plastic per kit and the plastic costs $2 per ounce. Indirect materials are considered insignificant and are not included in the budgeting process. Beginning Raw Materials Inventory is 860 ounces, and the company desires to end each quarter with 30% of the materials needed for the next quarter's production. Preston desires a balance of 290 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 $55 per hour. Manufacturing overhead is allocated using direct labor hours as the allocation base. Variable overhead is $0.75 per kit, and fixed overhead is $170 per quarter