Carlton, Inc. manufactures model airplane kits and projects production at 550, 420, 150, and 800 kits for the next four quarters. (Click the icon to view the manufacturing information.) Prepare Carlton'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 Carlton's direct materials budget. 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 Carlton, Inc. Direct Materials Budget For the Year Ended December 31 First Quarter Second Quarter Third Quarter Fourth Quarter Total More info Direct materials are five ounces of plastic per kit and the plastic costs $3 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 30% of the materials needed for the next quarter's production. Carlton desires a balance of 210 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 $40 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 $135 per quarter. Print Done X
Carlton, Inc. manufactures model airplane kits and projects production at 550, 420, 150, and 800 kits for the next four quarters. (Click the icon to view the manufacturing information.) Prepare Carlton'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 Carlton's direct materials budget. 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 Carlton, Inc. Direct Materials Budget For the Year Ended December 31 First Quarter Second Quarter Third Quarter Fourth Quarter Total More info Direct materials are five ounces of plastic per kit and the plastic costs $3 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 30% of the materials needed for the next quarter's production. Carlton desires a balance of 210 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 $40 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 $135 per quarter. Print Done X
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:**Carlton, Inc. Direct Materials Budget for Model Airplane Kits**
Carlton, Inc. manufactures model airplane kits and plans to produce 550, 420, 150, and 800 kits over the next four quarters. This document outlines the preparation of Carlton’s direct materials budget for the year ending December 31, including the direct labor budget and manufacturing overhead budget.
### Direct Materials Budget
#### Production Plan per Quarter:
- **First Quarter**: 550 kits
- **Second Quarter**: 420 kits
- **Third Quarter**: 150 kits
- **Fourth Quarter**: 800 kits
### Table Structure
The budget table displays rows for each calculation necessary to determine the direct materials cost:
1. **Direct materials (ounces) per kit**
2. **Direct materials needed for production**
3. **Plus: Total direct materials needed**
4. **Less: Budgeted purchases of direct materials**
Next, the costs per quarter are calculated:
- **Direct materials cost per ounce**
- **Budgeted cost of direct materials purchases**
### More Information
- **Direct Materials**: Each kit requires five ounces of plastic, costing $3 per ounce.
- **Inventory Management**: Carlton desires to end each quarter with inventory covering 30% of the materials needed for the next quarter.
- **Beginning Inventory**: The initial raw materials inventory is 910 ounces.
- **Additional Costs and Labor**:
- 0.50 hours of direct labor per kit at $40 per hour
- Manufacturing overhead is allocated using direct labor hours
- Variable overhead: $0.60 per kit
- Fixed overhead: $135 per quarter
This structured budget helps Carlton, Inc. manage the production costs effectively while maintaining the required inventory levels for efficient manufacturing processes.
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