Question
Exercise 20-15 Manufacturing: Direct materials, direct labor, and overhead budgets LO P1 MCO Leather Goods manufactures leather purses. Each purse requires 2 pounds of direct
Exercise 20-15 Manufacturing: Direct materials, direct labor, and overhead budgets LO P1
MCO Leather Goods manufactures leather purses. Each purse requires 2 pounds of direct materials at a cost of $3 per pound and 0.7 direct labor hours at a rate of $19 per hour. Variable manufacturing overhead is charged at a rate of $2 per direct labor hour. Fixed manufacturing overhead is $19,000 per month. The companys policy is to end each month with direct materials inventory equal to 20% of the next months materials requirement. At the end of August the company had 3,080 pounds of direct materials in inventory. The companys production budget reports the following.
Production Budget | September | October | November | |||
Units to be produced | 4,600 | 6,500 | 6,600 | |||
(1) Prepare direct materials budgets for September and October. (2) Prepare direct labor budgets for September and October. (3) Prepare factory overhead budgets for September and October.
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