Shadee Corp. expects to sell 550 sun visors in May and 380 in June. Each visor s

Question

Shadee Corp. expects to sell 550 sun visors in May and 380 in June. Each visor sells for $16. Shadee’s beginning and ending finished goods inventories for May are 65 and 40 units, respectively. Ending finished goods inventory for June will be 65 units.

Each visor requires a total of $5.50 in direct materials that includes an adjustable closure that the company purchases from a supplier at a cost of $2.50 each. Shadee wants to have 28 closures on hand on May 1, 17 closures on May 31, and 20 closures on June 30. Additionally, Shadee’s fixed manufacturing overhead is $1,000 per month, and variable manufacturing overhead is $1.00 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.)

Suppose that each visor takes 0.30 direct labor hours to produce and Shadee pays its workers $8 per hour.


3. Determine Shadee's budgeted direct labor cost for May and June. (Do not round your intermediate values. Round your answers to 2 decimal places.)

Explanation / Answer

Production Budget May June Budgeted sales unit 550 380 Add: ending units 40 65 Less: beginning Units 65 40 Budgeted Production units 525 405 Req 1: Budgeted Cost of Closures May June Budgeted Production units 525 405 Clsure required per unit 1 1 Closure requirement 525 405 Add: ending Inventory 17 20 Total needs 542 425 Less: Bbegining Inventory 28 17 Clsures purchase units 514 408 Price per clsure 2.50 2.50 Purchases in $ 1285.00 1020.00 Req 2: Budgeted manufacturing OH cost: May June Budgeted Production units 525 405 variable Manufacturing Oh @1 per unit 525 405 Fixed manufacturing Cost 1000 1000 Budgted Manufacturing OH 1525 1405

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