MCO Leather Goods manufactures leather purses. Each purse requires 3 pounds of d
ID: 2546875 • Letter: M
Question
MCO Leather Goods manufactures leather purses. Each purse requires 3 pounds of direct materials at a cost of $4 per pound and 07 direct labor hours at a rate of $20 per hour. Variable manufacturing overhead is charged at a rate of $2 per direct labor hour. Fixed manufacturing overhead is $12,000 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 3780 pounds of direct materials in inventory. The company's production budget reports the following. Units to be produced 4,900 6,900 6,700 (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. MCO LEATHER GOODS Direct Materials Budget For the Months of September and October September October Budgeted production (units) Materials requirements per unit (lb%) Materials needed for production (lbs.) Budgeted ending inventory (ibs.) Total materials requirements (bs.) Budgeted beginning inventory (ibs.) Materials to be purchased (Ibs.) Direct material cost per lb. Total budgeted direct materials SExplanation / Answer
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Direct materials Budget September October November Budgeted Production (units) 4,900 6,900 6,700 Materials requirement per unit (lbs) 3 3 3 Materials needed for production (lbs) 14,700 20,700 20,100 Budgeted ending inventory (lbs)Sept = (20700*0.40)
Oct = (20100*0.40) 8,280 8,040 Total Materials requirement (lbs) 22,980 28,740 Budgeted beginnng inventory (lbs) 3,780 8,280 Materials to be purchased (lbs) 19,200 20,460 Direct material cost per lb. 4 4 Total budgeted direct materials $ 76,800 $ 81,840
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