Question

SB Exercise E8-5 to E8-10

[The following information applies to the questions displayed below.]

Shadee Corp. expects to sell 570 sun visors in May and 440 in June. Each visor sells for $23. Shadee’s beginning and ending finished goods inventories for May are 85 and 45 units, respectively. Ending finished goods inventory for June will be 55 units.

2) -6 Preparing Raw Materials Purchases and Manufacturing Overhead Budgets [LO 8-3c, e]

Each visor requires a total of $5.00 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 29 closures on hand on May 1, 21 closures on May 31, and 20 closures on June 30. Additionally, Shadee’s fixed manufacturing overhead is $1,300 per month, and variable manufacturing overhead is $2.50 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.)

3) 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 $10 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.)

Answer 1

	Requirement 1:
	Budgeted Cost of Closures purchased for May and June:
		May	June
A	Ending Inventory of Finished Goods (Sun Visors)	45	55
B	Add: Budgeted number of units to be sold	570	440
C	Less: Beginning Inventory of Finished Goods (Sun Visors)	85	45
D	Budgeted Number of units to be produced (A+B-C)	530	450
E	Closures required for production (D*1)	530	450
F	Add: Ending Inventory of Closures	21	20
G	Less: Beginning Inventory of Closures	29	21
H	Closures to be purchased (E+F-G)	522	449
I	Purchase cost of the closure	$1.50	$1.50
J	Budgeted Cost of Closures purchased (H*I)	$783.00	$673.50
	Requirement 2:
	Budgeted Manufacturing Overhead:
		May	June
A	Budgeted Number of units to be produced	530	450
B	Variable Manufacturing Overhead per unit	$2.50	$2.50
C	Total Variable Manufacturing Overhead (A*B)	$1,325.00	$1,125.00
D	Fixed Manufacturing Overhead	$1,300	$1,300
E	Budgeted Manufacturing Overhead (C+D)	$2,625.00	$2,425.00
	Requirement 3:
	Direct Labor Budget:
		May	June
A	Budgeted Number of units to be produced	530	450
B	Direct Labor required per unit (hrs)	0.6	0.6
C	Total Direct Labor Hours required for production (A*B)	318	270
	Requirement 4:
	Budgeted Direct Labor Cost:
		May	June
A	Total Direct Labor Hours required for production	318	270
B	Direct Labor Cost per hour	$10	$10
C	Budgeted Direct Labor Cost (A*B)	$3,180	$2,700