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MCO Leather Goods manufactures leather purses. Each purse requires 3 pounds of direct materials at a...

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Accounting

MCO Leather Goods manufactures leather purses. Each purserequires 3 pounds of direct materials at a cost of $4 per pound and0.7 direct labor hours at a rate of $14 per hour. Variablemanufacturing overhead is charged at a rate of $2 per direct laborhour. Fixed manufacturing overhead is $17,000 per month. Thecompany’s policy is to end each month with direct materialsinventory equal to 20% of the next month’s materials requirement.At the end of August the company had 4,180 pounds of directmaterials in inventory. The company’s production budget reports thefollowing.

Production BudgetSeptemberOctoberNovember
Units to be produced5,5007,2006,700


(1) Prepare direct materials budgets for September andOctober.
(2) Prepare direct labor budgets for September andOctober.
(3) Prepare factory overhead budgets for Septemberand October.

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MCO Leather Goods Direct materials budget for September and October September October units to be produced 5500 7200 pounds needed per unit 3 3 materials needed for production lbs 16500 21600 Desired ending direct materials 4320 4020 direct materials needed for    See Answer
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