Question

SB Exercise E8-5 to E8-10

Shadee Corp. expects to sell 560 sun visors in May and 430 in June. Each visor sells for $20. Shadee’s beginning and ending finished goods inventories for May are 70 and 40 units, respectively. Ending finished goods inventory for June will be 60 units.

References

Section BreakSB Exercise E8-5 to E8-10

2.

value:
2.00 points

Required information

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

Each visor requires a total of $4.50 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, 17 closures on May 31, and 26 closures on June 30. Additionally, Shadee’s fixed manufacturing overhead is $1,500 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.)

	May June Budgeted Cost of Closures Purchased

2. Determine Shadee's budget manufacturing overhead for May and June. (Do not round your intermediate values. Round your answers to 2 decimal places.)

	May June Budgeted Manufacturing Overhead

E8-7 Preparing Direct Labor Budget [LO 8-3d]

Suppose that each visor takes 0.60 direct labor hours to produce and Shadee pays its workers $9 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.)

	May June Budgeted Direct Labor Cost

Answer 1

Solution 1:

Production Budget - Shadee Corp
Particulars	May	June
Expected sales units	560	430
Add: ending inventory	40	60
Less: Beginning inventory	70	40
Estimated production units of visor	530	450

Budgeted Purchase of cost of closures - Shadee Corp
Particulars	May	June
Budgeted Production units	530	450
Adjustable closure per unit	1	1
Estimated consumption of Adjustable Closures	530	450
Add: ending inventory	17	26
Less: Beginning inventory	30	17
Budgeted purchase units of adjustable closures	517	459
Cost per unit of closures	$1.50	$1.50
Budgeted cost of purchases	$775.50	$688.50

Solution 2:

Budgeted manufacturing overhead budget - Shadee Corp
Particulars	May	June
Budgeted Production units	530	450
Variable overhead cost per unit	$1.25	$1.25
Budgeted variable overhead cost	$662.50	$562.50
Budgeted fixed overhead cost	$1,500.00	$1,500.00
Budgeted manufacturing overhead	$2,162.50	$2,062.50

Solution 3:

Budgeted labor cost budget - Shadee Corp
Particulars	May	June
Budgeted Production units	530	450
Direct labor hours per unit	0.60	0.60
Budgeted direct labor hours	318	270
direct labor cost per hour	$9.00	$9.00
Budgeted direct labor cost	$2,862.00	$2,430.00