Shadee Corp. expects to sell 600 sun visors in May and 800 in June. Each visor s

Question

Shadee Corp. expects to sell 600 sun visors in May and 800 in June. Each visor sells for $18. Shadee’s beginning and ending finished goods inventories for May are 75 and 50 units, respectively. Ending finished goods inventory for June will be 60 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 30 closures on hand on May 1, 20 closures on May 31, and 25 closures on June 30. Additionally, Shadee’s fixed manufacturing overhead is $1,000 per month, and variable manufacturing overhead is $1.25 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.

Suppose that each visor takes 0.30 direct labor hours to produce and Shadee pays its workers $9 per hour.        

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

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 30 closures on hand on May 1, 20 closures on May 31 and 25 closures on June 30 and variable manufacturing overhead is $1.25 per unit produced. Suppose that each visor takes 0.30 direct labor hours to produce and Shadee pays its workers $9 per hour.     

Required:
1. Determine Shadee’s budgeted manufacturing cost per visor. (Note: Assume that fixed overhead per unit is $2.) (Round your answer to 2 decimal places.)

            

2. Determine Shadee's budgeted cost of goods sold for May and June.

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 30 closures on hand on May 1, 20 closures on May 31, and 25 closures on June 30 and variable manufacturing overhead is $1.25 per unit produced. Suppose that each visor takes 0.30 direct labor hours to produce and Shadee pays its workers $9 per hour.        

Additional information:     

Selling costs are expected to be 6 percent of sales.

Fixed administrative expenses per month total $1,200.

Required:       
Complete Shadee's budgeted income statement for the months of May and June. (Note: Assume that fixed overhead per unit is $2.)

Explanation / Answer

1.

2.

3.

Closure purchase budget May June Budgeted production units 575 810 Closure per unit of production 1 1 Closure units required for production 575 810 Add: Ending inventory 20 25 595 835 Less: Beginning inventory 30 20 Purchase of closures units 565 815 Cost per unit of closure           1.50           1.50 Purchase budget of closures 848 1223

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