MCO Leather manufactures leather purses. Each purse requires 2 pounds of direct materials at a cost of $4 per pound and 0.7 direct labor hour at a rate of $13 per hour. Variable overhead is budgeted at a rate of $2 per direct labor hour. Budgeted fixed overhead is $20,000 per month. The company's policy is to end each month with direct materials inventory equal to 20% of the next month's direct materials requirement. At the end of August the company had 1,760 pounds of direct materials in inventory. The company's production budget reports the following. Production Budget Units to produce September October November 4,400 6,900 6,800 (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. Answer is not complete.

MCO Leather manufactures leather purses. Each purse requires 2 pounds of direct materials at a cost of $4 per pound and 0.7 direct labor hour at a rate of $13 per hour. Variable overhead is budgeted at a rate of $2 per direct labor hour. Budgeted fixed overhead is $20,000 per month. The company's policy is to end each month with direct materials inventory equal to 20% of the next month's direct materials requirement. At the end of August the company had 1,760 pounds of direct materials in inventory. The company's production budget reports the following. Production Budget Units to produce September October November 4,400 6,900 6,800 (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. Answer is not complete.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Master Budget

A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.

Sales Budget and Selling

A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.

Question

MCO Leather manufactures leather purses. Each purse requires 2 pounds of direct materials at a cost of $4 per pound and 0.7 direct
labor hour at a rate of $13 per hour. Variable overhead is budgeted at a rate of $2 per direct labor hour. Budgeted fixed overhead is
$20,000 per month. The company's policy is to end each month with direct materials inventory equal to 20% of the next month's direct
materials requirement. At the end of August the company had 1,760 pounds of direct materials in inventory. The company's production
budget reports the following.
Production Budget September October November
Units to produce
4,400
6,900
6,800
(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.
Answer is not complete.
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
Direct Materials Budget
September
October
Units to produce
4,4000
6,900
Materials required per unit (pounds)
2
2▾
Materials needed for production (pounds)
Add: Desired ending materials inventory
8,800
13,800
3,520 X
3,520 X
Total materials required (pounds)
Less: Beginning materials inventory
12,320
17,320
Materials to purchase (pounds)
Materials cost per pound
12,320
17,320
Cost of direct materials purchases
$
0
$
0
< Required 1
Required 2 >

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