Exercise 7-15 Manufacturing: Direct materials, direct labor, and overhead budgets LO P1

MCO Leather Goods manufactures leather purses. Each purse requires 3 pounds of direct materials at a cost of $5 per pound and 0.7 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 $18,000 per month. The companys policy is to end each month with direct materials inventory equal to 40% of the next months materials requirement. At the end of August the company had 3,280 pounds of direct materials in inventory. The companys production budget reports the following.

Production Budget	September	October	November
Units to be produced	5,200	6,900	6,600

(1)	Prepare direct materials budgets for September and October. https://gyazo.com/e6638a091dedd7d89c782c74e673b919 https://gyazo.com/731b261b53382e77e143656fe4f4b243 https://gyazo.com/3302e8527c93e8e452ef8962b649465c

MCO Leather Goods Direct Materials Budget For the Months of September and October September October Budgeted production (units) Materials requirements per unit Materials needed for production (Ibs.) Budgeted ending inventory (lbs.) Total materials requirements (lbs.) Budgeted beginning inventory (Ibs.) Materials to be purchased (lbs.) Direct material cost per lb Total budgeted direct materials