Required info: Shadee Corp. expects to sell 600 sun visors in May and 800 in Jun
ID: 2460798 • Letter: R
Question
Required info:
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.)
A) Determine Shadee's budgeted cost of closures purchased for May and June: Budgeted cost of closures purchased: May__________ June___________
B) Determine Shadee's budget manufacturing overhead for May and June. (Round your answers to 2 decimal places.) Budgeted Manufacturing overhead: May______ June________
Explanation / Answer
Solution:
A) Calculation of Budgeted Cost of Closures Purchase
May
June
Budgeted Sales Unit
600
800
Add: Ending finished goods inventory
50
60
Less: Beginning finished goods inventory
(75)
(50)
Budgeted Production Units
575
810
Add: Ending Closures Inventory
20
25
Less: Beginning Closures Inventory
(30)
(20)
Budgeted Closures Purchase
565
815
Cost of Closure per unit
$1.50
$1.50
Budgeted Cost of Closures Purchase
$847.50
$1,222.50
B) Calculation of Manufacturing Overhead Budget
May
June
Budgeted Production Unit
575
810
Fixed Manufacturing Overhead (Fixed)
$1,000
$1,000
Variable Manufacturing Overhead @ $1.25
$718.75
$1,012.50
Total Manufacturing Overhead
$1,718.75
$2,012.50
May
June
Budgeted Sales Unit
600
800
Add: Ending finished goods inventory
50
60
Less: Beginning finished goods inventory
(75)
(50)
Budgeted Production Units
575
810
Add: Ending Closures Inventory
20
25
Less: Beginning Closures Inventory
(30)
(20)
Budgeted Closures Purchase
565
815
Cost of Closure per unit
$1.50
$1.50
Budgeted Cost of Closures Purchase
$847.50
$1,222.50
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