MCO Leather Goods manufactures leather purses. Each purse requires 2 pounds of direct materials at a cost

Question:

MCO Leather Goods manufactures leather purses. Each purse requires 2 pounds of direct materials at a cost of $4 per pound and 0.8 direct labor hours at a rate of $16 per hour. Variable manufacturing overhead is charged at a rate of $2 per direct labor hour. Fixed manufacturing overhead is $10,000 per month. The company€™s policy is to end each month with direct materials inventory equal to 40% of the next month€™s materials requirement. At the end of August the company had 3,680 pounds of direct materials in inventory. The company€™s production budget reports the following. Prepare budgets for September and October for
(1) Direct materials,
(2) Direct labor,
(3) Factory overhead.