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 $4 per pound and 0.7 direct labor hours at a rate of $14 per hour. Variable manufacturing overhead is charged at a rate of $3 per direct labor hour. Fixed manufacturing overhead is $15,000 per month. The company's policy is to end each month with direct materials inventory equal to 30% of the next month's materials requirement. At the end of August the company had 2,780 pounds of direct materials in inventory. The company's production budget reports the following. Production Budget Units to be produced September October November 4,900 6,800 6,700 (1) Prepare direct materials budgets for September and October (2) (3) Prepare factory overhead budgets for September and October. dire abor for Octobe Required 2 Required 3 Required 1 Prepare direct materials budgets for September and October MCO LEATHER GOODS Direct Materials Budget For the Months of September and October September October Budgeted production (units) Materials requirements per unit (lbs.) 6,800 4,900 2 2 Materials needed for production (Ibs.) 9,800 13,600 Budgeted ending inventory (Ibs.) Total materials requirements (Ibs.) Budgeted beginning inventory (Ibs.) Materials to be purchased (lbs.) Direct material cost per lb. 4,960 6,030 14,760 19,630 14,760 19,630 0 C Total budgeted direct materials EA Required 1 Required 2 Required 3 Prepare direct labor budgets for September and October. (Round MCO LEATHER GOODS Direct Labor Budget For the Months of September and October September October Budgeted production (units) DL hours required per unit Total direct labor hours needed Direct labor rate per hour 0$ $ 0 budgeted direct labor Required 1 Required 2 Required 3 Prepare factory overhead budgets for September and Oc 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 0 $