Question

Part three: Gordon, Inc. makes toys and projects production to be 6100, 5900, 6000, and 5500 for the next four quarters. Direct materials are $8 per kit. Beginning Raw Material Inventory is $20,000 and the company desires to end each quarter with 25% of the material needed for the next two quarter's production. Direct Materials needed for production in the First Quarter of the following year is $45,000. Gordon desires a balance of $25,000 in Raw Materials Inventory at the end of the fourth quarter. Each kit requires 1.3 hours of direct labor at an average cost of $30 per hour. Each kit requires 1.25 machine hours. Manufacturing overhead is allocated using machine hours as the allocation base. Variable overhead is $50 per kit and fixed overhead is $30,000 in the first two quarters and $32,000 in the third and fourth quarter.

Prepare Gordon's direct material budget, direct labor budget, and manufacturing overhead budget for the year. Round the direct labor hours needed for production, budgeted overhead costs, and predetermind overhead allocation rate to two decimal places. Round other amounts to the nearest whole number.

GORDON, INC.
Direct Labor Budget
For the Year Ended December 31
				First	Second	Third	Fourth
				Quarter	Quarter	Quarter	Quarter	Total
Budgeted kits to be produced
GORDON, INC.
Manufacturing Overhead Budget
For the Year Ended December 31
				First	Second	Third	Fourth
				Quarter	Quarter	Quarter	Quarter	Total
Budgeted kits to be produced
Predetermined overhead allocation rate
(show calculations for allocation base)
								-

Answer 1

1.

Gordon Inc.
Direct Labor Budget
For the year ended December 31
	1st Quarter	2nd Quarter	3rd Quarter	4th Quarter
Budgeted kits to be produced	6,100	5,900	6,000	5,500
Direct labor hours per unit	1.30 hours	1.30 hours	1.30 hours	1.30 hours
Budgeted direct labor hours	7,930	7,670	7,800	7,150
Direct labor hour rate	$ 30	$ 30	$ 30	$ 30
Budgeted direct labor dollars	$ 237,900	$ 230,100	$ 234,000	$ 214,500

2.

Gordon Inc.
Manufacturing Overhead Budget
For the year ended December 31
	1st Quarter	2nd Quarter	3rd Quarter	4th Quarter
Budgeted kits to be produced	6,100	5,900	6,000	5,500
Variable overhead per unit	$ 50	$ 50	$ 50	$ 50
Budgeted variable overhead	$ 305,000	$ 295,000	$ 300,000	$ 275,000
Fixed Overhead	30,000	30,000	32,000	32,000

Allocation base = Total units budgeted to be produced x Machine Hours per unit = 23,500 x 1.25 = 29,375 MHs.

Predetermined overhead rate = Budgeted Total Overhead / Budgeted Machine Hours = [ (23,500 x $ 50) + $ 124,000 ] / 29,375 = $ 44.22 ???

It seems that some vital information is missing in the post !