Shadee Corp. expects to sell 550 sun visors in May and 450 in June. Each visor s

Question

Shadee Corp. expects to sell 550 sun visors in May and 450 in June. Each visor sells for $18. Shadee’s beginning and ending finished goods inventories for May are 65 and 40 units, respectively. Ending finished goods inventory for June will be 55 units.

Each visor requires a total of $5.00 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 31 closures on hand on May 1, 18 closures on May 31, and 28 closures on June 30. Additionally, Shadee’s fixed manufacturing overhead is $1,500 per month, and variable manufacturing overhead is $1.25 per unit produced.

Determine Shadee's budgeted cost of closures purchased for May and June.

Determine Shadee's budget manufacturing overhead for May and June.

Suppose that each visor takes 0.60 direct labor hours to produce and Shadee pays its workers $7 per hour.

Determine Shadee's budgeted direct labor cost for May and June.

Explanation / Answer

uniits to produced may june units to be sold 550 450 ADD: ending inventory 40 55 LESS: beginning inventory 65 40 units to be produced 525 465 cost of closures purchased may june units to be produced 525 465 X quantity closure requried for each unit 1 1 total raw material requried for production 525 465 ending inventory 18 28 total raw material required 543 493 beginning inventory 31 18 raw material to be purchased 512 475 cost per unit 2 2 tota cost of raw material purchased 1024 950 budget manufacturing overhead may june units to be produced 525 465 variable cost per unit 1.25 1.25 total variable cost 656.25 581.25 total fixed cost 1500 1500 Total manufacturing overhead 2156.25 2081.25 budgeted direct labor cost may june units to be produced 525 465 labor hours per unit 0.6 0.6 total labor hours required 315 279 labor cost per hour 7 7 total labor cost 2205 1953

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