Question

Shadee Corp. expects to sell 530 sun visors in May and 420 in June. Each visor sells for $17. Shadee’s beginning and ending finished goods inventories for May are 70 and 55 units, respectively. Ending finished goods inventory for June will be 50 units.

Each visor requires a total of $3.50 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 31 closures on hand on May 1, 17 closures on May 31, and 23 closures on June 30. Additionally, Shadee’s fixed manufacturing overhead is $1,100 per month, and variable manufacturing overhead is $0.75 per unit produced.

Required:
1. Determine Shadee's budgeted cost of closures purchased for May and June. (Round your answers to 2 decimal places.)
Required:
1. Determine Shadee's budgeted cost of closures purchased for May and June. (Round your answers to 2 decimal places.)

Suppose that each visor takes 0.80 direct labor hours to produce and Shadee pays its workers $6 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.)


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

Answer 1

Solution 1:

Production Budget - Shadee Corp
Particulars	May	June
Expected sales units	530	420
Add: ending inventory	55	50
Less: Beginning inventory	70	55
Estimated production units of visor	515	415

Budgeted Purchase of cost of closures - Shadee Corp
Particulars	May	June
Budgeted Production units	515	415
Adjustable closure per unit	1	1
Estimated consumption of Adjustable Closures	515	415
Add: ending inventory	17	23
Less: Beginning inventory	31	17
Budgeted purchase units of adjustable closures	501	421
Cost per unit of closures	$1.50	$1.50
Budgeted cost of purchases	$751.50	$631.50

Budgeted labor cost budget - Shadee Corp
Particulars	May	June
Budgeted Production units	515	415
Direct labor hours per unit	0.80	0.80
Budgeted direct labor hours	412	332
direct labor cost per hour	$6.00	$6.00
Budgeted direct labor cost	$2,472.00	$1,992.00

Solution 2:

Budgeted manufacturing overhead budget - Shadee Corp
Particulars	May	June
Budgeted Production units	515	415
Variable overhead cost per unit	$0.75	$0.75
Budgeted variable overhead cost	$386.25	$311.25
Budgeted fixed overhead cost	$1,100.00	$1,100.00
Budgeted manufacturing overhead	$1,486.25	$1,411.25