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Trevor Inc. manufactures model airplane kits and projects production at at

300,330,350,and 750 kits for the next four quarters.

Prepare Trevor 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 Kelvin's direct materials budget.

Trevor, Inc.
Direct Materials Budget
For the Year Ended December 31
		First		Second	Third			Fourth
		Quarter		Quarter	Quarter			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 5 ounces of plastic per kit and the plastic costs $4 per ounce. Indirect materials are considered insignificant and are not included in the budgeting process. Beginning Raw Materials Inventory is 910 ounces, and the company desires to end each quarter with 20% of the materials needed for the next quarter's production. Trevor desires a balance of 230 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 $30 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 $ 125 per quarter.

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