MCO Leather manufactures leather purses. Each purse requires 2 pounds of direct materials at a cost of $4 per pound and 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. DM per unit (pounds) DM Cost per pound DLHs per unit Direct Labor rate per hour 2 $4 0.80 $16 VOH rate per DLH Fixed Overhead Direct Materials requirement August ending inventory $2 $10,000 40% 3,680 Production Budget September October November Units to produce 4,600 6,200 5,800 (1) Prepare direct materials budgets for September and October. (2) Prepare direct labor budgets for September and October. (3) Prepare factory overhead budgets for September and October. Please provide formulas please
MCO Leather manufactures leather purses. Each purse requires 2 pounds of direct materials at a cost of $4 per pound and 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. DM per unit (pounds) DM Cost per pound DLHs per unit Direct Labor rate per hour 2 $4 0.80 $16 VOH rate per DLH Fixed Overhead Direct Materials requirement August ending inventory $2 $10,000 40% 3,680 Production Budget September October November Units to produce 4,600 6,200 5,800 (1) Prepare direct materials budgets for September and October. (2) Prepare direct labor budgets for September and October. (3) Prepare factory overhead budgets for September and October. Please provide formulas please
Principles of Cost Accounting
17th Edition
ISBN:9781305087408
Author:Edward J. Vanderbeck, Maria R. Mitchell
Publisher:Edward J. Vanderbeck, Maria R. Mitchell
Chapter7: The Master Budget And Flexible Budgeting
Section: Chapter Questions
Problem 4E: Prepare a cost of goods sold budget for the Crest Hills Manufacturing Co. for the year ended...
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Concept explainers
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
Question
| MCO Leather manufactures leather purses. Each purse requires 2 pounds of direct materials at a cost of $4 per pound and 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. | DM per unit (pounds) | DM Cost per pound | DLHs per unit | Direct Labor rate per hour | |||
| 2 | $4 | 0.80 | $16 | ||||
| VOH rate per DLH | Fixed Overhead | Direct Materials requirement | August ending inventory | ||||
| $2 | $10,000 | 40% | 3,680 | ||||
| Production Budget | September | October | November | ||||
| Units to produce | 4,600 | 6,200 | 5,800 |
| (1) Prepare direct materials budgets for September and October. |
| (2) Prepare direct labor budgets for September and October. |
| (3) Prepare factory overhead budgets for September and October. |
Please provide formulas please
Transcribed Image Text:Units to produce
Direct labor hours required per unit
Direct labor hours needed
Budgeted direct labor cost
MCO Leather
Direct Labor Budget
Direct labor hours needed
September October
4,600
(3) Prepare factory overhead budgets for September and October.
(Use cells A2 to H11 from the given information to complete this question.)
MCO Leather
Factory Overhead Budget
Budgeted variable overhead
Budgeted fixed overhead
Budgeted total factory overhead
6,200
September
October
Transcribed Image Text:MCO Leather
Direct Materials Budget
Units to produce
Budgeted units sales for month
Materials needed for production (pounds)
Total materials required (pounds)
Materials to purchase (pounds)
Budgeted direct materials purchases
September
4,600
October
6,200
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