Question
MCO Leather manufactures leather purses. Each purse requires 2 pounds of direct materials at a cost of $4 per pound and 0.8 direct labor hour
MCO Leather manufactures leather purses. Each purse requires 2 pounds of direct materials at a cost of $4 per pound and 0.8 direct labor hour at a rate of $16 per hour. Variable overhead is budgeted at a rate of $2 per direct labor hour. Budgeted fixed overhead is $10,000 per month. The companys policy is to end each month with direct materials inventory equal to 40% of the next months direct materials requirement. At the end of August the company had 3,680 pounds of direct materials in inventory. The companys production budget reports the following.
Production Budget | September | October | November |
---|---|---|---|
Units to produce | 4,600 | 6,200 | 5,800 |
(1) Prepare direct materials budgets for September and October.
(2) Prepare direct labor budgets for September and October.
(3) Prepare factory overhead budgets for September and October.
\begin{tabular}{|c|c|c|} \hline \multicolumn{3}{|c|}{ MCO Leather } \\ \hline \multicolumn{3}{|c|}{ Direct Materials Budget } \\ \hline & September & October \\ \hline Units to produce & 4,600 & 6,200 \\ \hline \multicolumn{3}{|l|}{ Materials required per unit (pounds) } \\ \hline Materials needed for production (pounds) & 0 & 0 \\ \hline & & \\ \hline Total materials required (pounds) & 0 & 0 \\ \hline 7 & & \\ \hline Materials to purchase (pounds) & 0 & 0 \\ \hline 7 & & \\ \hline Cost of direct materials purchases & $ & $ \\ \hline \end{tabular} \begin{tabular}{|c|c|c|} \hline \multicolumn{3}{|c|}{ MCO Leather } \\ \hline \multicolumn{3}{|c|}{ Factory Overhead Budget } \\ \hline & September & October \\ \hline \multicolumn{3}{|l|}{ Direct labor hours needed } \\ \hline 7 & & \\ \hline Budgeted variable overhead & $ & $ \\ \hline \multicolumn{3}{|c|}{3} \\ \hline Budgeted total factory overhead & $ & $ \\ \hline \end{tabular}Step by Step Solution
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