Shadee Corp. expects to sell 600 sun visors in May and 350 in June. Each visor s
ID: 2556526 • Letter: S
Question
Shadee Corp. expects to sell 600 sun visors in May and 350 in June. Each visor sells for $22. Shadee’s beginning and ending finished goods inventories for May are 80 and 50 units, respectively. Ending finished goods inventory for June will be 55 units.
Each visor requires a total of $4.00 in direct materials that includes an adjustable closure that the company purchases from a supplier at a cost of $1.50 each. Shadee wants to have 31 closures on hand on May 1, 20 closures on May 31, and 23 closures on June 30. Additionally, Shadee’s fixed manufacturing overhead is $1,300 per month, and variable manufacturing overhead is $1.75 per unit produced.
Each visor requires a total of $4.00 in direct materials that includes an adjustable closure that the company purchases from a supplier at a cost of $1.50 each. Shadee wants to have 31 closures on hand on May 1, 20 closures on May 31, and 23 closures on June 30 and variable manufacturing overhead is $1.75 per unit produced. Suppose that each visor takes 0.70 direct labor hours to produce and Shadee pays its workers $10 per hour.
Each visor requires a total of $4.00 in direct materials that includes an adjustable closure that the company purchases from a supplier at a cost of $1.50 each. Shadee wants to have 31 closures on hand on May 1, 20 closures on May 31, and 23 closures on June 30. Additionally, Shadee’s fixed manufacturing overhead is $1,300 per month, and variable manufacturing overhead is $1.75 per unit produced. Each visor takes 0.70 direct labor hours to produce and Shadee pays its workers $10 per hour.
Each visor requires a total of $4.00 in direct materials that includes an adjustable closure that the company purchases from a supplier at a cost of $1.50 each. Shadee wants to have 31 closures on hand on May 1, 20 closures on May 31, and 23 closures on June 30 and variable manufacturing overhead is $1.75 per unit produced. Suppose that each visor takes 0.70 direct labor hours to produce and Shadee pays its workers $10 per hour.
Additional information:
Selling costs are expected to be 6 percent of sales.
Fixed administrative expenses per month total $1,500.
Required:
Complete Shadee's budgeted income statement for the months of May and June. (Note: Assume that fixed overhead per unit is $1.90.) (Do not round your intermediate calculations. Round your answers to 2 decimal places.)
Explanation / Answer
Answer 1 Shadee's budgeted total sales for May and June May June Budgeted Total sales 13200 7700 Answer 2 Shadee's Budgeted Production in units for May and June May June Sales units 600 350 Add : Ending Finished Goods Inventory 50 55 Less : Beginning Finished Goods Inventory 80 50 Budgeted Production Units 570 355 Answer 3 Shadee's budgeted cost fo closures purchased May June Budgeted Production Units 570 355 X Adjustable closure per unit 1 1 Total Needs 570 355 Add:Ending Inventory 20 23 Less : Beginning Inventory 31 20 Adjustable closures purchased 559 358 x Rate per closure 1.5 1.5 Budgeted cost of closures purchased 838.5 537 Answer 4 Shadee's budgeted manufacturing overheads May June Budgeted Production Units 570 355 x Variable manufacturing overhead per unit 1.75 1.75 Variable Manufacturing Overheads 997.5 621.25 Fixed Manufacturing Overhead 1300 1300 Budgeted Manufacturing Overheads 2297.5 1921.25 Answer 5 Shadee's budgeted direct labour cost Budgeted Production Units 570 355 x Direct Labour hours per unit 0.7 0.7 Total Direct Labour hours required 399 248.5 x Direct Labour rate per hour 10 10 Budgeted Direct Labour cost 3990 2485 Answer 6 Shadee's Manufacturing Cost per unit Per Unit Direct Material cost 4 Direct Labour cost 7 Variable Manufacturing Overhead 1.75 Fixed Manufacturing Overhead 1.9 Manufacturing Cost per unit 14.65 Answer 7 Shadee's Budgeted cost of good sold May June Sales units 600 350 x Manufacturing Cost per unit 14.65 14.65 Budgeted cost of goods sold 8790 5127.5 Answer 8 Shadee's Budgeted Selling and administrative expenses May June Selling cost (6% of sales) 792 462 Fixed administrative expense 1500 1500 Budgeted Selling and administrative expenses 2292 1962 Answer 9 Shadee's Budgeted Income Statement SHADEE CORP. Budgeted Income Statement May June Budgeted Sales revenue $13,200.00 $7,700.00 Less : Budgeted Cost of good sold $8,790.00 $5,127.50 Budgeted Gross Margin $4,410.00 $2,572.50 Less : Budgeted Selling and administrative expense $2,292.00 $1,962.00 Budgeted Net Operating Income $2,118.00 $610.50
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