Exercise 22-16 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 $3 per pound and 0.5 direct labor hours at a rate of $18 per hour. Variable manufacturing overhead is charged at a rate of $3 per direct labor hour. Fixed manufacturing overhead is $4,000 per month. The companys policy is to maintain direct materials inventory equal to 20% of the next months materials requirement. At the end of March the company had 5,280 pounds of direct materials in inventory. The companys production budget reports the following.

Production Budget	March	April	May
Units to be produced	3,300	4,600	4,800