Exercise 20-16 Manufacturing: Direct materials, direct labor, and overhead budgets LO P1 Ornamental Sculptures Mfg. manufactures garden sculptures. Each sculpture requires 8 pounds of direct materials at a cost of $4 per pound and 0.4 direct labor hours at a rate of $15 per hour. Variable manufacturing overhead is charged at a rate of $3 per direct labor hour. Fixed manufacturing overhead is $4,400 per month. The company's policy is to maintain direct materials inventory equal to 30% of the next month's materials requirement. At the end of February the company had 4,480 pounds of direct materials in inventory. The company's production budget reports the following. May Production Budget Units to be produced March 3,800 April 4,700 5,000 (1) Prepare direct materials budgets for March and April. (2) Prepare direct labor budgets for March and April. (3) Prepare factory overhead budgets for March and April. Required 1 Required 2 Required 3 Prepare direct materials budgets for March and April. April 4,700 8 ORNAMENTAL SCULPTURES MFG. Direct Materials Budget For the Months of March and April March Budgeted production (units) 3,800 Materials requirements per unit 8 (lbs.) Materials needed for production 30,400 (lbs.) Budgeted ending inventory (lbs.) 11,280 Total materials requirements (lbs.) 41,680 Budgeted beginning inventory (lbs.) Materials to be purchased (lbs.) 32,560 Direct material cost per lb. $ 4 $ Total budgeted direct materials 130,240 37,600 12,000 49,600 9,120 X 11,280 38,320 $ 4 $ 153,280