Question

Exercise 20-15 Manufacturing: Direct materials, direct labor, and overhead budgets LO P1 MCO Leather Goods manufactures leather purses. Each purse requires 2 pounds of direct materials at a cost of $5 per pound and 0.7 direct labor hours at a rate of $13 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 30% of the next month's materials requirement. At the end of August the company had 4,080 pounds of direct materials in inventory. The company's production budget reports the following. Production Budget Units to be produced September 4,900 October 6,200 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 Required 1 Required 2 Required 3 Prepare direct materials budgets for September and October. Required 1 Required 2 Required 3 Prepare factory overhead 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 (lbs.) Materials needed for production (lbs.) Budgeted ending inventory (lbs.) Total materials requirements (lbs.) Budgeted beginning inventory (lbs.) Materials to be purchased (lbs.) Direct material cost per lb. Total budgeted direct materials MCO LEATHER GOODS Factory Overhead Budget For the Months of September and October September October Total direct labor hours needed VOH rate per DL hour Budgeted variable overhead Budgeted fixed overhead Total budgeted factory overhead Required 1 Required 2 Required 3 Prepare direct labor budgets for September and October. (Round "DL hours required per unit" answers to one decimal place.) MCO LEATHER GOODS Direct Labor Budget For the Months of September and October September October Budgeted production (units) DL hours required per unit Total direct labor hours needed Direct labor rate per hour Total budgeted direct labor

Answer 1

MCO LEATHER GOODS Direct Materials Budget For the months of september and ocober September October Budgeted production (units) 4900 62001 Materials requirements per unit (lbs.) 2 Materials needed for production (lbs) 9800 12400 Budgeted ending inventory (lbs) 3720 3780 Total material requirements (lbs) 13520 16180 Budgeted beginning inventory (lbs) 40801 3720 Materials to be purchased (lbs) 9440 12460 Direct material cost per lb Total budgeted direct materials 4720062300

MCO LEATHER GOODS Direct Labor Budget For the months of september and ocober September October Budgeted production (units) 4900 6200 DL hours required per unit 0.71 0.71 Total direct labor hours needed 3430 4340 Direct labor rate per hour Total budgeted direct labor 56420 13V 44590 MCO LEATHER GOODS Factory Overhead Budget For the months of september and ocober September October Total direct labor ours needed 3430 4340 VOH rate per DL hour 22 Budgeted Variable overhead 6860 8680 Budgeted Fixed overhead 18000 18000 Total budgeted Factory overhead 24860 26680