Question

Refer to the budgets prepared in Exercise E22- 25. Determine the cost per kit to manufacture the model airplane kits. Grady projects sales of 325, 400, 475, and 525 kits per quarter. Prepare a cost of goods sold budget for the year. Grady has no kits in beginning inventory.
Round amounts to two decimal places.

Exercise E22- 25
Grady, Inc. manufactures model airplane kits and projects production at 350, 425, 450, and 500 kits per quarter. Direct materials are $ 6 per kit. Indirect ma-terials are considered insignificant and are not included in the budgeting process. Beginning Raw Materials Inventory is $ 600, and the company desires to end each quarter with 20% of the materials needed for the next month’s production. Grady desires a balance of $ 600 in Raw Materials Inventory at the end of the fourth quarter. Each kit requires 0.25 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 $ 0.50 per kit and fixed overhead is $ 129 per quarter. Prepare Grady’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.




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  • CreatedJanuary 16, 2015
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