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MCO Leather manufactures leather purses. Each purse requires 2 pounds of direct materials at a cost of $3 per pound and 0.7 direct labor
MCO Leather manufactures leather purses. Each purse requires 2 pounds of direct materials at a cost of $3 per pound and 0.7 direct labor hour at a rate of $14 per hour. Variable overhead is budgeted at a rate of $2 per direct labor hour. Budgeted fixed overhead is $14,000 per month. The company's policy is to end each month with direct materials inventory equal to 20% of the next month's direct materials requirement. At the end of August the company had 1,680 pounds of direct materials in inventory. The company's production budget reports the following. Production Budget September October November Units to produce 4,200 7,000 5,900 (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. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Prepare direct materials budgets for September and October. Units to produce MCO Leather Direct Materials Budget September October 4,200 2 7,000 2 8,400 14,000 Materials required per unit (pounds) Materials needed for production (pounds) Add: Desired ending materials inventory Total materials required (pounds) Less: Beginning materials inventory 8,400 14,000
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