Shadee Corp. expects to sell 610 sun visors in May and 390 in June. Each visor s

Question

Shadee Corp. expects to sell 610 sun visors in May and 390 in June. Each visor sells for $20. Shadee’s beginning and ending finished goods inventories for May are 80 and 55 units, respectively. Ending finished goods inventory for June will be 60 units. Suppose that each visor takes 0.90 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

1) Calculation of budgeted direct labour cost for May and June :

Calculation of Budgeted production units :

May :

Estimated production for the month .= .Expected sales + Closing stock - Opening stock

= 610 + 55 - 80

= 585 visors

Budgeted direct labours required for May = 585 * 0.90hr

  = 526.50 hours

Budgeted Labour cost for may = 526.50 * $7

= $3685.50

June :

Estimated production for the month .= .Expected sales + Closing stock - Opening stock

= 390 + 60 - 55

  = 395 visors

Budgeted direct labours required for June = 395 * 0.90hr

  = 355.50 hours

Budgeted Labour cost for June = 355.50 * $7

   = $2488.50

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