Question: mco leather goods manufactures leather purses each purse requires 3...
MCO Leather Goods manufactures leather purses. Each purse requires 3 pounds of direct materials at a cost of $3 per pound and 0.7 direct labor hours at a rate of $11 per hour. Variable manufacturing overhead is charged at a rate of $3 per direct labor hour. Fixed manufacturing overhead is $15,000 per month. The company’s policy is to end each month with direct materials inventory equal to 20% of the next month’s materials requirement. At the end of August the company had 4,380 pounds of direct materials in inventory. The company’s production budget reports the following.
|Units to be produced||4,700||6,300||6,300|
(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.