Preston, Inc. manufactures model airplane kits and projects production at 300, 620, 200, and 700 kits for the next four quarters. K i (Click the icon to view the manufacturing information.) Prepare Preston'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. Round other amounts to the nearest whole number. Begin by preparing Preston's direct materials budget. X Preston, Inc. More info Direct Materials Budget For the Year Ended December 31 Direct materials are five ounces of plastic per kit and the plastic costs $3 per First Second Third Fourth ounce. Indirect materials are considered insignificant and are not included in the budgeting process. Beginning Raw Materials Inventory is 870 ounces, and the Quarter Quarter Quarter Quarter Total company desires to end each quarter with 30% of the materials needed for the Budgeted kits to be produced next quarter's production. Preston desires a balance of 220 ounces in Raw 300 620 200 700 1,820 Materials Inventory at the end of the fourth quarter. Each kit requires 0.25 hours of Direct materials (ounces) per kit 5 5 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 Direct materials needed for production 1,500 3,100 1,000 3,500 9,100 $0.70 per kit, and fixed overhead is $170 per quarter. Plus: Desired direct materials in ending inventory Total direct materials needed Less: Direct materials in beginning inventory Print Done Budgeted purchases of direct materials Direct materials cost per ounce S 3 3 $ Budgeted cost of direct materials purchases Demodocs example Clear all Final check