MCO Leather manufactures leather purses. Each purse requires 3 pounds of direct materials at a cost of $5 per pound and 0.7 directlabor hours at a rate of $20 per hour. Variable manufacturing overhead is charged at a rate of $3 per direct labor hour. Fixedmanufacturing overhead is $14,000 per month. The company's policy is to end each month with direct materials inventory equal to20% of the next month's materials requirement. At the end of August the company had 3,780 pounds of direct materials in inventory.The company's production budget reports the following.Production BudgetUnits to be producedSeptember5,100October7,000November6,600(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

Direct material budget is used to calculate the quantity and the amount of the material to be…

Answered: MCO Leather manufactures leather…

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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Iguana, Inc., manufactures bamboo picture frames that sell for $25 each. Each frame requires 4 linear feet of bamboo, which costs $2.00 per foot. Each frame takes approximately 30 minutes to build, and the labor rate averages $12.00 per hour. Iguana has the following inventory policies: • Ending finished goods inventory should be 40 percent of next month's sales. • Ending raw materials inventory should be 30 percent of next month's production. Expected unit sales (frames) for the upcoming months follow: March April 275 250 May 300 June 400 July August 375 425 Variable manufacturing overhead is incurred at a rate of $0.30 per unit produced. Annual fixed manufacturing overhead is estimated to be $7,200 ($600 per month) for expected production of 4,000 units for the year. Selling and administrative expenses are estimated at $650 per month plus $0.60 per unit sold. Iguana, Inc., had $10,800 cash on hand on April 1. Of its sales, 80 percent is in cash. Of the credit sales, 50 percent is…

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