Prepare Grady's direct labor budget, and manufacturing overhead budget for the year. Grady, Inc. manufactures model airplane kits and projects production at 650, 500, 450, and 600 kits for the next four quarters.(Click the icon to view the manufacturing information.)Prepare Grady's direct materials budget, direct labor budget, and manufacturing overhead budget for the year. Round the direct laborhours needed for production, budgeted overhead costs, and predetermined overhead allocation rate to two decimal places. Round otheamounts to the nearest whole number.Direct Materials BudgetFor the Year Ended December 31FirstQuarterBudgeted kits to be producedDirect materials (ounces) per kitDirect materials needed for productionPlus: Desired direct materials in ending inventoryTotal direct materials neededLess: Direct materials in beginning inventoryBudgeted purchases of direct materialsDirect materials cost per ounceBudgeted cost of direct materials purchases650SecondQuarter5004ThirdQuarter450FourthQuarter600Total2,200 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 budgetingprocess. Beginning Raw Materials Inventory is 850 ounces, and the companydesires to end each quarter with 10% of the materials needed for the next quarter'sproduction. Grady desires a balance of 200 ounces in Raw Materials Inventory atthe end of the fourth quarter. Each kit requires 0.10 hours of direct labor at anaverage cost of $10 per hour. Manufacturing overhead is allocated using directlabor hours as the allocation base. Variable overhead is $0.20 per kit, and fixedoverhead is $165 per quarter.

Lets understand the basics.Budgeting: It is a process of planning the work to be performed. Under…

Grady, Inc. manufactures model airplane kits and projects production at 650, 500, 450, and 600 kits for the next four quar (Click the icon to view the manufacturing information.) 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. Round othe amounts to the nearest whole number. Diet Motosials Budgnt

Grady, Inc. manufactures model airplane kits and projects production at 650, 500, 450, and 600 kits for the next four quar (Click the icon to view the manufacturing information.) 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. Round othe amounts to the nearest whole number. Diet Motosials Budgnt

FINANCIAL ACCOUNTING

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ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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Concept explainers

Overheads

In cost accounting, overhead refers to those expenses which occur during the operating of a business. Overhead includes the fixed, variable, or semi-variable which is not directly involved with a company product or service. It is very important to analyze overhead expense as it helps the company in determining how much a company must charge for its products and services so that they can generate profit. Overhead expenses depend upon the nature of the business operations.

Question

Prepare Grady's direct labor budget, and manufacturing overhead budget for the year.

Grady, Inc. manufactures model airplane kits and projects production at 650, 500, 450, and 600 kits for the next four quarters.
(Click the icon to view the manufacturing information.)
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. Round othe
amounts to the nearest whole number.
Direct Materials Budget
For the Year Ended December 31
First
Quarter
Budgeted kits to be produced
Direct materials (ounces) per kit
Direct materials needed for production
Plus: Desired direct materials in ending inventory
Total direct materials needed
Less: Direct materials in beginning inventory
Budgeted purchases of direct materials
Direct materials cost per ounce
Budgeted cost of direct materials purchases
650
Second
Quarter
500
4
Third
Quarter
450
Fourth
Quarter
600
Total
2,200

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.

Definition Definition Indirect costs incurred while producing goods or services. Overhead costs cannot be directly attributed to products or services. Overhead includes indirect material cost, indirect labor cost, rent, utilities expenses, and depreciation. Since these costs directly affect the profitability of a company, managing overhead becomes an important task for management.

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