Question

MCO Leather 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 $17 per hour. Variable manufacturing overhead is charged at a rate of $2 per direct labor hour. Fixed manufacturing overhead is $18,000 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 3,080 pounds of direct materials in inventory. The company’s production budget reports the following.

Production Budget	September		October		November
Units to be produced	4,700		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.

Prepare direct materials budgets for September and October.

MCO Leather Direct Materials Budget For the Months of September and October September October Budgeted production (units) Materials requirements per unit (lbs.) Materials needed for production (lbs.) 546,000,000 79,380,000 Budgeted ending inventory (lbs.) Total materials requirements (lbs.) 546,000,000 79,380,000 Budgeted beginning inventory (lbs.) Materials to be purchased (lbs.) 546,000,000 79,380,000 Direct material cost per lb. $3 Total budgeted direct materials $1,638,000,000 $0

Prepare direct labor budgets for September and October. (Round "DL hours required per unit" answers to one decimal place.)

	MCO Leather Direct Labor Budget For the Months of September and October September October Budgeted production (units) not attempted not attempted DL hours required per unit not attempted not attempted Total direct labor hours needed 0 0 Direct labor rate per hour not attempted not attempted Total budgeted direct labor $0 $0

Prepare factory overhead budgets for September and October.

MCO Leather
Factory Overhead Budget
For the Months of September and October
	September	October
Total direct labor hours needed	not attempted	not attempted
VOH rate per DL hour	not attempted	not attempted
Budgeted variable overhead	0	0
Budgeted fixed overhead	not attempted

Answer 1

1.)	MCO Leather
	Direct Materials Budget
	For the Months of September and October
		September	October
	Budgeted production (units)	4,700	6,900
	x Materials requirements per unit (lbs.)	3	3
	Materials needed for production (lbs.)	14,100	20,700
	Add :Budgeted ending inventory (lbs.) @30% of next month requirement	6,210	6,030
	Total materials requirements (lbs.)	20,310	26,730
	Les :Budgeted beginning inventory (lbs.)	3,080	6,210
	Materials to be purchased (lbs.)	17,230	20,520
	x Direct material cost per lb. $	3	3
	Total budgeted direct materials $	51,690	61,560
2.)	MCO Leather
	Direct Labor Budget
	For the Months of September and October
		September	October
	Budgeted production (units)	4,700	6,900
	x DL hours required per unit	0.70	0.70
	Total direct labor hours needed	3,290	4,830
	x Direct labor rate per hour $	17	17
	Total budgeted direct labor $	55,930	82,110
3.)
	MCO Leather
	Factory Overhead Budget
	For the Months of September and October
		September	October
	Total direct labor hours needed	3,290	4,830
	x VOH rate per DL hour $	2	2
	Budgeted variable overhead $	6,580	9,660
	Budgeted fixed overhead	18,000	18,000
	Total Budgeted overhead $	24,580	27,660