Preston, Inc. manufactures model airplane kits. Direct materials are five 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. Each kit requires 0.25 hours of direct labor at an average cost of $40 per hour. Manufacturing overhead is allocated using direct labor hours as the allocation base. The company has prepared the following budgets: 1(Click the icon to view the budgets.) Preston projects sales of 200, 500, 700, and 600 kits for the next four quarters. Preston has no kits in beginning inventory. Determine the cost per kit to manufacture the model airplane kits. Prepare a cost of goods sold budget for the year. Round amounts to two decimal places. Determine the cost per kit to manufacture the model airplane kits. (Round your answers to two decimal places, $X.XX.) (1) Direct materials cost per kit (2) Direct labor cost per kit (3) Manufacturing overhead cost per kit Total projected manufacturing cost per kit Prepare a cost of goods sold budget for the year. (Complete all input fields. Enter "0" for zero balances.) Preston, Inc. Cost of Goods Sold Budget For the Year Ended December 31 First Second Third Fourth Quarter Quarter Quarter Quarter Total (4) Kits produced and sold Total budgeted cost of goods sold 1: Reference Preston, Inc. Direct Materials Budget For the Year Ended December 31 First Second Third Fourth Quarter Quarter Quarter Quarter Total Budgeted kits to be produced 300 530 150 650 1,630 Direct materials (ounces) per kit 5 5 5 5 5 Direct materials needed for production 1,500 2,650 750 3,250 8,150 Plus: Desired direct materials in ending inventory 795 225 975 220 220 Total direct materials needed 2,295 2,875 1,725 3,470 8,370 Less: Direct materials in beginning inventory 870 795 225 975 870 Budgeted purchases of direct materials 1,425 2,080 1,500 2,495 7,500 Direct materials cost per ounce $1 $1 $1 $1 $1 Budgeted cost of direct materials purchases $1,425 $2,080 $1,500 $2,495 $7,500 Preston, Inc. Direct Labor Budget For the Year Ended December 31 First Second Third Fourth Quarter Quarter Quarter Quarter Total Budgeted kits to be produced 300 530 150 650 1,630 Direct labor hours per unit 0.25 0.25 0.25 0.25 0.25 Direct labor hours needed for production 75.00 132.50 37.50 162.50 407.50 Direct labor cost per hour $40 $40 $40 $40 $40 Budgeted direct labor cost $3,000 $5,300 $1,500 $6,500 $16,300 Preston, Inc. Manufacturing Overhead Budget For the Year Ended December 31 First Second Third Fourth Quarter Quarter Quarter Quarter Total Budgeted kits to be produced 300 530 150 650 1,630 VOH cost per kit $0.90 $0.90 $0.90 $0.90 $0.90 Budgeted VOH $270.00 $477.00 $135.00 $585.00 $1,467.00 Budgeted FOH 175.00 175.00 175.00 175.00 700.00 Budgeted manufacturing overhead costs $445.00 $652.00 $310.00 $760.00 $2,167.00 Direct labor hours 75.00 132.50 37.50 162.50 407.50 Budgeted manufacturing overhead costs $2,167.00 Predetermined overhead allocation rate $5.32 (1) Direct labor cost per kit Direct materials cost per kit Manufacturing overhead cost per kit Selling price per kit (2) Direct labor cost per kit Direct materials cost per kit Manufacturing overhead cost per kit Selling price per kit (3) Direct labor cost per kit Direct materials cost per kit Manufacturing overhead cost per kit Selling price per kit (4) Beginning inventory Ending inventory

Preston, Inc. manufactures model airplane kits. Direct materials are five 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. Each kit requires 0.25 hours of direct labor at an average cost of $40 per hour. Manufacturing overhead is allocated using direct labor hours as the allocation base. The company has prepared the following budgets: 1(Click the icon to view the budgets.) Preston projects sales of 200, 500, 700, and 600 kits for the next four quarters. Preston has no kits in beginning inventory. Determine the cost per kit to manufacture the model airplane kits. Prepare a cost of goods sold budget for the year. Round amounts to two decimal places. Determine the cost per kit to manufacture the model airplane kits. (Round your answers to two decimal places, $X.XX.) (1) Direct materials cost per kit (2) Direct labor cost per kit (3) Manufacturing overhead cost per kit Total projected manufacturing cost per kit Prepare a cost of goods sold budget for the year. (Complete all input fields. Enter "0" for zero balances.) Preston, Inc. Cost of Goods Sold Budget For the Year Ended December 31 First Second Third Fourth Quarter Quarter Quarter Quarter Total (4) Kits produced and sold Total budgeted cost of goods sold 1: Reference Preston, Inc. Direct Materials Budget For the Year Ended December 31 First Second Third Fourth Quarter Quarter Quarter Quarter Total Budgeted kits to be produced 300 530 150 650 1,630 Direct materials (ounces) per kit 5 5 5 5 5 Direct materials needed for production 1,500 2,650 750 3,250 8,150 Plus: Desired direct materials in ending inventory 795 225 975 220 220 Total direct materials needed 2,295 2,875 1,725 3,470 8,370 Less: Direct materials in beginning inventory 870 795 225 975 870 Budgeted purchases of direct materials 1,425 2,080 1,500 2,495 7,500 Direct materials cost per ounce $1 $1 $1 $1 $1 Budgeted cost of direct materials purchases $1,425 $2,080 $1,500 $2,495 $7,500 Preston, Inc. Direct Labor Budget For the Year Ended December 31 First Second Third Fourth Quarter Quarter Quarter Quarter Total Budgeted kits to be produced 300 530 150 650 1,630 Direct labor hours per unit 0.25 0.25 0.25 0.25 0.25 Direct labor hours needed for production 75.00 132.50 37.50 162.50 407.50 Direct labor cost per hour $40 $40 $40 $40 $40 Budgeted direct labor cost $3,000 $5,300 $1,500 $6,500 $16,300 Preston, Inc. Manufacturing Overhead Budget For the Year Ended December 31 First Second Third Fourth Quarter Quarter Quarter Quarter Total Budgeted kits to be produced 300 530 150 650 1,630 VOH cost per kit $0.90 $0.90 $0.90 $0.90 $0.90 Budgeted VOH $270.00 $477.00 $135.00 $585.00 $1,467.00 Budgeted FOH 175.00 175.00 175.00 175.00 700.00 Budgeted manufacturing overhead costs $445.00 $652.00 $310.00 $760.00 $2,167.00 Direct labor hours 75.00 132.50 37.50 162.50 407.50 Budgeted manufacturing overhead costs $2,167.00 Predetermined overhead allocation rate $5.32 (1) Direct labor cost per kit Direct materials cost per kit Manufacturing overhead cost per kit Selling price per kit (2) Direct labor cost per kit Direct materials cost per kit Manufacturing overhead cost per kit Selling price per kit (3) Direct labor cost per kit Direct materials cost per kit Manufacturing overhead cost per kit Selling price per kit (4) Beginning inventory Ending inventory

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter7: Budgeting

Section: Chapter Questions

Problem 3PB: TIB makes custom guitars and prepared the following sales budget for the second quarter It also has...

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Question

Preston,

Inc. manufactures model airplane kits. Direct materials are

five

ounces of plastic per kit and the plastic costs

per ounce. Indirect materials are considered insignificant and are not included in the budgeting process. Each kit requires

0.25

hours of direct labor at an average cost of

$40

per hour. Manufacturing overhead is allocated using direct labor hours as the allocation base. The company has prepared the following budgets:

1(Click

the icon to view the budgets.)

Preston

projects sales of

200,

500,

700,

and

600

kits for the next four quarters.

Preston

has no kits in beginning inventory. Determine the cost per kit to manufacture the model airplane kits. Prepare a cost of goods sold budget for the year. Round amounts to two decimal places.

Determine the cost per kit to manufacture the model airplane kits. (Round your answers to two decimal places, $X.XX.)

(1) Direct materials cost per kit
(2) Direct labor cost per kit
(3) Manufacturing overhead cost per kit
Total projected manufacturing cost per kit

Prepare a cost of goods sold budget for the year. (Complete all input fields. Enter "0" for zero balances.)

Preston, Inc.
Cost of Goods Sold Budget
For the Year Ended December 31
	First	Second	Third	Fourth
	Quarter	Quarter	Quarter	Quarter	Total
(4)
Kits produced and sold
Total budgeted cost of goods sold

1: Reference

Preston, Inc.
Direct Materials Budget
For the Year Ended December 31
	First	Second	Third	Fourth
	Quarter	Quarter	Quarter	Quarter	Total
Budgeted kits to be produced	300	530	150	650	1,630
Direct materials (ounces) per kit	5	5	5	5	5
Direct materials needed for production	1,500	2,650	750	3,250	8,150
Plus: Desired direct materials in ending inventory	795	225	975	220	220
Total direct materials needed	2,295	2,875	1,725	3,470	8,370
Less: Direct materials in beginning inventory	870	795	225	975	870
Budgeted purchases of direct materials	1,425	2,080	1,500	2,495	7,500
Direct materials cost per ounce	$1	$1	$1	$1	$1
Budgeted cost of direct materials purchases	$1,425	$2,080	$1,500	$2,495	$7,500

Preston, Inc.
Direct Labor Budget
For the Year Ended December 31
	First	Second	Third	Fourth
	Quarter	Quarter	Quarter	Quarter	Total
Budgeted kits to be produced	300	530	150	650	1,630
Direct labor hours per unit	0.25	0.25	0.25	0.25	0.25
Direct labor hours needed for production	75.00	132.50	37.50	162.50	407.50
Direct labor cost per hour	$40	$40	$40	$40	$40
Budgeted direct labor cost	$3,000	$5,300	$1,500	$6,500	$16,300

Preston, Inc.
Manufacturing Overhead Budget
For the Year Ended December 31
	First	Second	Third	Fourth
	Quarter	Quarter	Quarter	Quarter	Total
Budgeted kits to be produced	300	530	150	650	1,630
VOH cost per kit	$0.90	$0.90	$0.90	$0.90	$0.90
Budgeted VOH	$270.00	$477.00	$135.00	$585.00	$1,467.00
Budgeted FOH	175.00	175.00	175.00	175.00	700.00
Budgeted manufacturing overhead costs	$445.00	$652.00	$310.00	$760.00	$2,167.00

Direct labor hours	75.00	132.50	37.50	162.50	407.50
Budgeted manufacturing overhead costs					$2,167.00
Predetermined overhead allocation rate					$5.32

(1)

Direct labor cost per kit

Direct materials cost per kit

Manufacturing overhead cost per kit

Selling price per kit

(2)

Direct labor cost per kit

Direct materials cost per kit

Manufacturing overhead cost per kit

Selling price per kit

(3)

Direct labor cost per kit

Direct materials cost per kit

Manufacturing overhead cost per kit

Selling price per kit

(4)

Beginning inventory

Ending inventory

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