Prepare GradyGrady'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.

 

Grady, Inc. manufactures model airplane kits and projects production at 650, 500, 450, and 600 kits for the next four quarters.

 

 

First  Quarter                                                            Second   Quarter        Third Quarter               Fourth  Quarter                   Total

 

Direct materials (ounces) per kit

 

Direct materials needed for production

 

 Plus________

 

Total direct materials needed

 

Less________

 

Budgeted purchases of direct materials

 

Direct materials cost per ounce

 

Budgeted cost of direct materials purchases

Direct materials are 4 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 850 ounces, and the company desires to end each quarter with 10% of the materials needed for the next quarter's production. Grady desires a balance of 200 ounces in Raw Materials Inventory at the end of the fourth quarter. Each kit requires 0.10 hours of direct labor at an average cost of $10 per hour. Manufacturing overhead is allocated using direct labor hours as the allocation base. Variable overhead is $0.20 per kit, and fixed overhead is $165 per quarter.