Shadee Corp. expects to sell 550 sun visors in May and 420 in June. Each visor s
ID: 2514604 • Letter: S
Question
Shadee Corp. expects to sell 550 sun visors in May and 420 in June. Each visor sells for $20. Shadee’s beginning and ending finished goods inventories for May are 90 and 50 units, respectively. Ending finished goods inventory for June will be 60 units.
Each visor requires a total of $4.50 in direct materials that includes an adjustable closure that the company purchases from a supplier at a cost of $2.00 each. Shadee wants to have 26 closures on hand on May 1, 20 closures on May 31, and 22 closures on June 30. Additionally, Shadee’s fixed manufacturing overhead is $1,200 per month, and variable manufacturing overhead is $1.75 per unit produced.
Required:
1. Determine Shadee's budgeted cost of closures purchased for May and June. (Round your answers to 2 decimal places.)
2. Determine Shadee's budget manufacturing overhead for May and June. (Do not round your intermediate values. Round your answers to 2 decimal places.)
Explanation / Answer
Answer
May
June
Expected Sales of finished units
550
420
Add: Ending inventory
50
60
Total requirement
600
480
Less: Beginning inventory
90
50
Units to be produced
510
430
May
June
Units to be produced
510
430
Closures requirement [1 unit for 1 finished unit]
510
430
Add: Ending inventory
20
22
Total requirement
530
452
Less: Beginning inventory
26
20
Closures purchased
504
432
Budgeted cost of closure purchased at $2
$ 1,008.00
$ 864.00
May
June
Units to be produced
510
430
Variable manufacturing overhead at $1.75 per unit
$ 892.50
$ 752.50
Fixed manufacturing overhead
$ 1,200.00
$ 1,200.00
Budgeted Manufacturing overhead
$ 2,092.50
$ 1,952.50
May
June
Expected Sales of finished units
550
420
Add: Ending inventory
50
60
Total requirement
600
480
Less: Beginning inventory
90
50
Units to be produced
510
430
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