Question

MCO Leather manufactures leather purses. Each purse requires 3 pounds of direct materials at a cost of $4 per pound and 0.7 direct labor hours at a rate of $19 per hour. Variable manufacturing overhead is charged at a rate of $3 per direct labor hour. Fixed manufacturing overhead is $19,000 per month. The company's policy is to end each month with direct materials inventory equal to 40% of the next month's materials requirement. At the end of August the company had 4,280 pounds of direct materials in inventory. The company's production budget reports the following. Production Budget Units to be produced September 4,600 October 6,500 November 6,000 (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.

Answer 1

MCO LEATHER GOODS Direct Materials Budget For the months of september and ocober September October Budgeted production (units) 4600 6500 Materials requirements per unit (lbs.) Materials needed for production (lbs) 13800 19500 Budgeted ending inventory (lbs) 7800 7200 Total material requirements (lbs) 21600 26700 Budgeted beginning inventory (lbs) 42801 7800 Materials to be purchased (lbs) 17320 18900 Direct material cost per lb Total budgeted direct materials 69280 75600 MCO LEATHER GOODS Direct Labor Budget For the months of september and ocober September October Budgeted production (units) 4600 6500 DL hours required per unit 0.7 0.71 Total direct labor hours needed 3220 4550 Direct labor rate per hour Total budgeted direct labor 61180 86450 19

MCO LEATHER GOODS Factory Overhead Budget For the months of september and ocober September October Total direct labor ours needed 3220 4550 VOH rate per DL hour 33 Budgeted Variable overhead 9660 13650 Budgeted Fixed overhead 19000 19000 Total budgeted Factory overhead 28660 32650