Shadee Corp. expects to sell 600 sun visors in May and 350 in June. Each visor 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 65 and 40 units, respectively. Ending finished goods inventory for June will be 55 units.

E8-6 Preparing Raw Materials Purchases and Manufacturing Overhead Budgets [LO 8-3c, e]

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 $2.00 each. Shadee wants to have 29 closures on hand on May 1, 20 closures on May 31, and 26 closures on June 30. Additionally, Shadee’s fixed manufacturing overhead is $1,400 per month, and variable manufacturing overhead is $2.00 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 0.80 direct labor hours to produce and Shadee pays its workers $7 per hour.

Required:
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

Statement Showing Production Budget May June Total Sales 600 350 950 Desired Ending inventory 40 55 55 Total Unit Needed 640 405 1005 Less: Beg. Inventory 65 40 65 Production required 575 365 940 Statement Showing Budgeted Cost material Purchase May June Total Production unit 575 365 940 RM Required /Visor ( $5.50/$2)=2.75 1581.25 1003.75 2585 Ending Raw Material 20 26 26 Total Raw material Required 1601.25 1029.75 2611 Less: Opening Inventory 29 20 29 Purchase Quantity Required 1572.25 1009.75 2582 Purchase Cost /Pound $2 $2.00 $2.00 Total Purchase Cost $3,145 $2,020 $5,164 Statement Showing Manufacturing Overhead Budget May June Total Unit Produced 575 365 940 Variable Manufacturing Overhead/Unit $2.00 $2.00 2 Total Variable Manufacturing Overhead (a) $1,150.00 $730.00 $1,880.00 Fixed Manufacturing Overhead (b) $1,400.00 $1,400.00 $2,800.00 Total Manufacturing Overhead Cost (a+b) $2,550.00 $2,130.00 $4,680.00 Statement Showing Direct Labour Cost Budget May June Total Unit Produced 575 365 940 Direct Labour Require/Unit 0.8 0.8 0.8 Total Labour Hour require (a) 460 292 752 Rate /Hour(b) $7 $7 $7 Total Labour Cost (a*b) $3,220 $2,044 $5,264

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