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Preston, Inc. manufactures model airplane kits and projects production at 550, 270, 300, and 800 kits for the next four quarters. (Click the icon to
Preston, Inc. manufactures model airplane kits and projects production at 550, 270, 300, and 800 kits for the next four quarters. (Click the icon to view the manufacturing information.) Prepare Preston's direct materials budget, direct labor budget, and manufacturing overhead budget for the year. Rour 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 Preston's direct materials budget. Preston, Inc. Direct Materials Budget For the Year Ended December 31 First Second Third Fourth Quarter Quarter Quarter Quarter Total Budgeted kits to be produced 550 270 300 800 1,920 4 4 4 4 Direct materials (ounces) per kit Direct materials needed for production 2,200 1,080 1,200 3,200 7,680 Desired direct materials in ending Plus: inventory 216 240 640 220 220 Total direct materials needed 2,416 1,320 1,840 3,420 7,900 Direct materials in beginning 930 www inventory 216 240 640 930 More info Direct materials are four 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. Preston desires a balance of 220 ounces 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 $15 per hour. Manufacturing overhead is allocated using direct labor hours as the allocation base. Variable overhead is $0.60 per kit, and fixed overhead is $175 per quarter. Print Done - Direct labor hours needed for production Budgeted direct labor cost Preston, Inc. Direct Labor Budget For the Year Ended December 31 First Second Third Fourth Quarter Quarter Quarter Quarter Total
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