MCO Leather Goods manufactures leather purses. Each purse requires 2 pounds of direct materials at a cost of $5 per pound and 0.7 direct labor hours at a rate of $11 per hour. Variable manufacturing overhead is charged at a rate of $3 per direct labor hour. Fixed manufacturing overhead is $16,000 per month. The company's policy is to end each month with direct materials inventory equal to 30% of the next month's materials requirement. At the end of August the company had 2,980 pounds of direct materials in inventory. The company's production budget reports the following. Production Budget Units to be produced September 4,700 October 6,700 November 6,700 (1) Prepare direct materials budgets for September and October. Answer is complete but not entirely correct. MCO Leather Goods Direct Materials Budget For the Months of September and October September October Budgeted production (units) 4,700 6,700 Materials requirements per unit 2.00 2.00 Materials needed for production 9,400 13,400 (lbs.) Budgeted ending inventory (lbs.) 2,980 X 2,980 Total materials requirements (lbs.) 12,380 16,380 Budgeted beginning inventory (lbs.) 2,980 2,980 Materials to be purchased (lbs.) 9,400 13,400 Direct material cost per lb. 69 $ 5.00 $ 5.00 Total budgeted direct materials $ 47,000 $ 67,000