Question

Shadee Corp. expects to sell 540 sun visors in May and 400 in June. Each visor sells for $23. Shadee’s beginning and ending finished goods inventories for May are 65 and 55 units, respectively. Ending finished goods inventory for June will be 65 units.

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 $2.00 each. Shadee wants to have 29 closures on hand on May 1, 16 closures on May 31, and 26 closures on June 30 and variable manufacturing overhead is $1.75 per unit produced. Suppose that each visor takes 0.70 direct labor hours to produce and Shadee pays its workers $9 per hour.

Required:

1. Determine Shadee’s budgeted manufacturing cost per visor. (Note: Assume that fixed overhead per unit is $2.)

2. Compute the Shadee’s budgeted cost of goods sold for May and June.

3. Selling costs are expected to be 11 percent of sales. Fixed administrative expenses per month total $1,600. Determine Shadee's budgeted selling and administrative expenses for May and June.

4. Complete Shadee's budgeted income statement for the months of May and June. (Note: Assume that fixed overhead per unit is $2.00.) (Do not round your intermediate calculations. Round your answers to 2 decimal places.)

Answer 1