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MCO Leather manufactures leather purses. Each purse requires 4 pounds of direct materials at a cost of $ 1 2 per pound and 0 .

MCO Leather manufactures leather purses. Each purse requires 4 pounds of direct
materials at a cost of $12 per pound and 0.6 direct labor hours at a rate of $16 per hour.
Variable overhead is budgeted at a rate of $4 per direct labor hour. Budgeted fixed
overhead is $11,000 per month. The company's policy is to end each month with direct
materials inventory equal to 30% of the next month's direct materials requirement. At
the end of August the company had 6,480 pounds of direct materials in inventory. The
company's production budget reports the following. (Click on the Direct Materials
Budget, Direct Labor Budget and Factory Overhead Budget Tabs below.)
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