MCO Leather manufactures leather purses. Each purse requires 3 pounds of direct materials at a...
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Accounting
MCO Leather manufactures leather purses. Each purse requires 3 pounds of direct materials at a cost of $3 per pound and 0.7 direct labor hours at a rate of $19 per hour. Variable manufacturing overhead is charged at a rate of $2 per direct labor hour. Fixed manufacturing overhead is $12,000 per month. The companys policy is to end each month with direct materials inventory equal to 30% of the next months materials requirement. At the end of August the company had 2,780 pounds of direct materials in inventory. The companys production budget reports the following.
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