Exercise 22-15 Manufacturing: Direct materials, direct labor, and overhead budgets (19 P1 MCO Leather manufactures leather purses. Each purse requires 2 pounds of direct materials at a cost of $4 per pound arid 0.8 direct labor hour at a rate of $16 per hour. Variable overhead is budgeted at a rate of $2 per direct labor hour. Budgeted fixed 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 direct 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, and (3) factory overhead