Each unit requires 3 pounds of direct materials, which cost $5 per pound. The company's policy is to maintain direct materials inventory equal to 40% of the next month's direct materials requirement. As of June 30 , the company has 4,920 pounds of direct materials in inventory. Prepare the direct materials budget for July. Each unit requires 5 hours of direct labor at a rate of $14 per hour. Prepare a direct labor budget for July. Each unit requires 5 hours of direct labor at a rate of $14 per hour. The company applies variable overhead at the rate of $12 per direct labor hour. Budgeted fixed factory overhead is $173,000 per month. Prepare a factory overhead budget for August