MCO Leather manufactures leather purses. Each purse requires 2 pounds of direct materials at a cost of $3 per pound and 0.7 direct labor hour at a rate of $19 per hour. Variable overhead is budgeted at a rate of $2 per direct labor hour. Budgeted fixed overhead is $14,000 per month. The company's policy is to end each month with direct materials inventory equal to 30% of the next month's direct materials requirement. At the end of August the company had 2,820 pounds of direct materials in inventory. The company's production budget reports the following. Production Budget September October Units to produce 4,700 6,500 November 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.

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
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Chapter1: Financial Statements And Business Decisions
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MCO Leather manufactures leather purses. Each purse requires 2 pounds of direct materials at a cost of $3 per pound and 0.7 direct
labor hour at a rate of $19 per hour. Variable overhead is budgeted at a rate of $2 per direct labor hour. Budgeted fixed overhead is
$14,000 per month. The company's policy is to end each month with direct materials inventory equal to 30% of the next month's direct
materials requirement. At the end of August the company had 2,820 pounds of direct materials in inventory. The company's
production budget reports the following.
Production Budget September
Units to produce
4,700
October
6,500
November
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.
Transcribed Image Text:MCO Leather manufactures leather purses. Each purse requires 2 pounds of direct materials at a cost of $3 per pound and 0.7 direct labor hour at a rate of $19 per hour. Variable overhead is budgeted at a rate of $2 per direct labor hour. Budgeted fixed overhead is $14,000 per month. The company's policy is to end each month with direct materials inventory equal to 30% of the next month's direct materials requirement. At the end of August the company had 2,820 pounds of direct materials in inventory. The company's production budget reports the following. Production Budget September Units to produce 4,700 October 6,500 November 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.
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