H 1 DM Cost per DLHs per unit DM per unit (pounds) pound Direct Labor rate per hour $16 S4 0.80 VOH rate per DLH $2 Fixed Overhead Direct Materials requirement $10,000 40% August ending inventory 3,680 A B C 1 2 MCO Leather manufactures leather purses. Each purse requires 2 pounds of direct a materials at a cost of $4 per pound and 0.8 direct labor hour at a rate of $16 per hour. 4 Variable overhead is budgeted at a rate of $2 per direct labor hour. Budgeted fixed 5 overhead is $10,000 per month. The company's policy is to end each month with direct 6 materials inventory equal to 40% of the next month's direct materials requirement. At the 7 end of August the company had 3,680 pounds of direct materials in inventory. The & company's production budget reports the following. 9 10 Production Budget September October November 11 Units to produce 4,600 6,200 5,800 12 13 Required: 14 (1) Prepare direct materials budgets for September and October 15 16 Use cells A2 to 11 from the given information to complete this question.) 17 18 MCO Leather 19 Direct Materials Budget 20 September October 21 Units to produce 22 Materials required per unit (pounds 22 Materials needed for production (pounds) 24 Add: Desired ending materials inventory 25 Total materials required (pounds) 26 Less: Beginning materials inventory 27 Materials to purchase (pounds) 28 Materials cost per pound 29 Budgeted direct materials purchases 30 31 (2) Prepare direct labor budgets for September and October 32 33 (Use cells A2 to 11 from the given information to complete this question.) 34 35 MCO Leather 36 Direct Labor Budget 37 September October 38 Units to produce 39 Direct labor hours required per unit 40 Direct labor hours needed 41 Direct labor cost per hour 42 Budgeted direct labor cost 44 (3) Prepare factory overhead budgets for September and October 45 46 (Use cells A2 to H11 from the given information to complete this question.) 47 43 MCO Leather 49 Factory Overhead Budget 50 September October 51 Direct labor hours needed 52 Variable overhead rate per direct labor hour 53 Budgeted variable averhead 54 Budgeted fixed averhead 55 Budgeted total factory overhead 56