MCO Leather Goods 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 $12 per hour. Variable manufacturing overhead is charged at a rate of $3 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 40% of the next month’s materials requirement. At the end of August the company had 2,780 pounds of direct materials in inventory The company’s production budget reports the following Production BudgetSeptember Units to be produced OctoberNovember 6,300 5,500 6,700 (1) 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 Materials needed for production (Ibs.) 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
mco leather manufactures leather purses
