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Luther, Inc. manufactures model airplane kits and projects production at 200, 450, 500, and 800 kits for the next four quarters. Direct materials are 7 ounces of plastic per kit and the plastic costs $5 per ounce. Indirect materials are considered insignificant and are not included in the budgeting process. Beginning Raw Materials Inventory is 860 ounces, and the company desires to end each quarter with 20% of the materials needed for the next quarter's production. Luther desires a balance of 230 ounces in Raw Materials Inventory at the end of the fourth quarter. Each kit requires 0.25 hours of direct labor at an average cost of $20 per hour. Manufacturing overhead is allocated using direct labor hours as the allocation base. Variable overhead is $0.25 per kit, and fixed overhead is $125 per quarter. Luther, Inc. Direct Materials Budget For the Year Ended December 31 First Second Third Fourth Quarter Quarter Quarter Quarter Total Budgeted kits to be produced 200 450 500 800 1950 Direct materials (ounces) per kit 7 7 7 7 Direct materials needed for production 1400 3150 3500 5600 13650 Plus: Desired direct materials in ending inventory 630 700 1120 230 230 Total direct materials needed 2030 3850 4620 5830 13880 Less: Direct materials in beginning inventory 860 630 700 1120 860 Budgeted purchases of direct materials 1170 3220 3920 4710 13020 Direct materials cost per ounce

Luther, Inc. manufactures model airplane kits and projects production at 200, 450, 500, and 800 kits for the next four quarters. Direct materials are 7 ounces of plastic per kit and the plastic costs $5 per ounce. Indirect materials are considered insignificant and are not included in the budgeting process. Beginning Raw Materials Inventory is 860 ounces, and the company desires to end each quarter with 20% of the materials needed for the next quarter's production. Luther desires a balance of 230 ounces in Raw Materials Inventory at the end of the fourth quarter. Each kit requires 0.25 hours of direct labor at an average cost of $20 per hour. Manufacturing overhead is allocated using direct labor hours as the allocation base. Variable overhead is $0.25 per kit, and fixed overhead is $125 per quarter. Luther, Inc. Direct Materials Budget For the Year Ended December 31 First Second Third Fourth Quarter Quarter Quarter Quarter Total Budgeted kits to be produced 200 450 500 800 1950 Direct materials (ounces) per kit 7 7 7 7 Direct materials needed for production 1400 3150 3500 5600 13650 Plus: Desired direct materials in ending inventory 630 700 1120 230 230 Total direct materials needed 2030 3850 4620 5830 13880 Less: Direct materials in beginning inventory 860 630 700 1120 860 Budgeted purchases of direct materials 1170 3220 3920 4710 13020 Direct materials cost per ounce

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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I just need to know what the direct materials cost per ounce value is please

Luther, Inc. manufactures model airplane kits and projects production at 200, 450, 500, and 800 kits for the next four quarters. Direct materials are 7 ounces of plastic per kit and the plastic costs $5 per ounce. Indirect materials are considered insignificant and are not included in the budgeting process. Beginning Raw Materials Inventory is 860 ounces, and the company desires to end each quarter with 20% of the materials needed for the next quarter's production. Luther desires a balance of 230 ounces in Raw Materials Inventory at the end of the fourth quarter. Each kit requires 0.25 hours of direct labor at an average cost of $20 per hour. Manufacturing overhead is allocated using direct labor hours as the allocation base. Variable overhead is $0.25 per kit, and fixed overhead is $125 per quarter. Luther, Inc. Direct Materials Budget For the Year Ended December 31 First Second Third Fourth Quarter Quarter Quarter Quarter Total Budgeted kits to be produced 200 450 500 800 1950 Direct materials (ounces) per kit 7 7 7 7 Direct materials needed for production 1400 3150 3500 5600 13650 Plus: Desired direct materials in ending inventory 630 700 1120 230 230 Total direct materials needed 2030 3850 4620 5830 13880 Less: Direct materials in beginning inventory 860 630 700 1120 860 Budgeted purchases of direct materials 1170 3220 3920 4710 13020 Direct materials cost per ounce
Transcribed Image Text:Luther, Inc. manufactures model airplane kits and projects production at 200, 450, 500, and 800 kits for the next four quarters. Direct materials are 7 ounces of plastic per kit and the plastic costs $5 per ounce. Indirect materials are considered insignificant and are not included in the budgeting process. Beginning Raw Materials Inventory is 860 ounces, and the company desires to end each quarter with 20% of the materials needed for the next quarter's production. Luther desires a balance of 230 ounces in Raw Materials Inventory at the end of the fourth quarter. Each kit requires 0.25 hours of direct labor at an average cost of $20 per hour. Manufacturing overhead is allocated using direct labor hours as the allocation base. Variable overhead is $0.25 per kit, and fixed overhead is $125 per quarter. Luther, Inc. Direct Materials Budget For the Year Ended December 31 First Second Third Fourth Quarter Quarter Quarter Quarter Total Budgeted kits to be produced 200 450 500 800 1950 Direct materials (ounces) per kit 7 7 7 7 Direct materials needed for production 1400 3150 3500 5600 13650 Plus: Desired direct materials in ending inventory 630 700 1120 230 230 Total direct materials needed 2030 3850 4620 5830 13880 Less: Direct materials in beginning inventory 860 630 700 1120 860 Budgeted purchases of direct materials 1170 3220 3920 4710 13020 Direct materials cost per ounce
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