Answer:
MCO Leather Manufacturing Company
1. Direct Materials Budget
September October
Materials requirement 9,778 13,000
Ending inventory 3,900 3,780
Materials available 13,678 16,780
Beginning inventory 4,280 3,900
Purchases (pounds) 9,398 12,880
Cost of purchases $46,990 $64,400
2. Direct labor budgets for September and October:
September October
Units to be produced 4,889 6,500
Direct labor hours 3,422 4,550
Direct labor costs $41,064 $54,600
3. Factory Overhead Budgets for September and October:
September October
Units to be produced 4,889 6,500
Variable overhead $6,845 $9,100
Fixed overhead 13,000 13,000
Total overhead $19,845 $22,100
Explanation:
a) Data and Calculations:
Direct materials required per purse = 2 pounds
Cost of a pound of direct materials = $5
Direct materials cost per unit = $10 ($5 * 2)
Direct labor cost per unit = $8.40 (0.7 * $12)
Variable overhead = $2 per direct labor hour
Variable overhead per unit = $1.40 ($2 * 0.7)
Fixed manufacturing overhead per month = $13,000
Desired ending inventory of direct materials = 30% required the next month
August ending direct materials inventory = 4,280 pounds
Production Budget September October November
Units to be produced 4,889 6,500 6,300
Materials requirement 9,778 13,000 12,600
1. Direct Materials Budget
September October November
Materials requirement 9,778 13,000 12,600
Ending inventory 3,900 3,780
Materials available 13,678 16,780
Beginning inventory 4,280 3,900 3,780
Purchases (pounds) 9,398 12,880
Cost of purchases $46,990 $64,400
2. Direct labor budgets for September and October:
September October November
Units to be produced 4,889 6,500 6,300
Direct labor hours 3,422 4,550 4,410
Direct labor costs $41,064 $54,600 $52,920
3. Factory Overhead Budgets for September and October:
September October November
Units to be produced 4,889 6,500 6,300
Variable overhead $6,845 $9,100 $8,820
Fixed overhead 13,000 13,000 13,000
Total overhead $19,845 $22,100 $21,820
