Question - MCO Leather Goods manufactures leather purses. Each purse requires 2 pounds of direct materials at a cost of $4 per pound and 0.7 direct labor hours at a rate of $18 per hour. Variable manufacturing overhead is charged at a rate of $3 per direct labor hour. Fixed manufacturing overhead is $14,000 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 4.680 pounds of direct materials in inventory. The company's production budget reports the following.
|
Production Budget
|
September
|
October
|
November
|
|
Units to be produced
|
5,200
|
6,500
|
6,000
|
Required -
(1) Prepare direct materials budgets for September and October.
(2) Prepare direct labor budgets for September and October.
(3) Prepare a factory overhead budgeted for September and October.