MCO Leather manufactures leather purses. Each purse requires 2 pounds of direct materials at a cost of
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MCO Leather 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 $10 per hour. Variable manufacturing overhead is charged at a rate of $3 per direct labor hour. Fixed manufacturing overhead is $11,000 per month. The company's policy is to end each month with direct materials inventory equal to 20% of the next month's materials requirement. At the end of August the company had 1,760 pounds of direct materials in inventory. The company's production budget reports the following.
Production Budget | September | October | November | |||
Units to be produced | 4,400 | 6,500 | 6,700 | |||
(1)Prepare direct materials budgets for September and October.
Related Book For
Fundamental Accounting Principles
ISBN: 978-0077862275
22nd edition
Authors: John Wild, Ken Shaw, Barbara Chiappetta
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