Question

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Shadee Corp. expects to sell 640 sun visors in May and 410 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 55 units.

1. 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 26 closures on hand on May 1, 16 closures on May 31, and 23 closures on June 30. Additionally, Shadee’s fixed manufacturing overhead is $800 per month, and variable manufacturing overhead is $2.00 per unit produced.

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

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

2. Suppose that each visor takes 0.50 direct labor hours to produce and Shadee pays its workers $11 per hour.

Determine Shadee's budgeted direct labor cost for May and June. (Do not round your intermediate values. Round your answers to 2 decimal places.)

3. 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 26 closures on hand on May 1, 16 closures on May 31, and 23 closures on June 30 and variable manufacturing overhead is $2.00 per unit produced. Suppose that each visor takes 0.50 direct labor hours to produce and Shadee pays its workers $11 per hour.

A. Determine Shadee’s budgeted manufacturing cost per visor. (Note: Assume that fixed overhead per unit is $1.80.) (Round your answer to 2 decimal places.)

B. Compute the Shadee’s budgeted cost of goods sold for May and June. (Do not round your intermediate values. Use rounded cost per unit in intermediate calculations.)

4. 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 26 closures on hand on May 1, 16 closures on May 31, and 23 closures on June 30. Additionally, Shadee’s fixed manufacturing overhead is $800 per month, and variable manufacturing overhead is $2.00 per unit produced. Each visor takes 0.50 direct labor hours to produce and Shadee pays its workers $11 per hour.

Additional information:

• Selling costs are expected to be 7 percent of sales.
• Fixed administrative expenses per month total $1,700.

Determine Shadee's budgeted selling and administrative expenses for May and June. (Do not round your intermediate calculations. Round your answers to 2 decimal places.)

Answer 1

Solution 1A:

Production Budget - Shadee Corp
Particulars	May	June
Expected sales units	640	410
Add: ending inventory	40	55
Less: Beginning inventory	70	40
Estimated production units of visor	610	425

\Budgeted Purchase of cost of closures - Shadee Corp
Particulars	May	June
Budgeted Production units	610	425
Adjustable closure per unit	1	1
Estimated consumption of Adjustable Closures	610	425
Add: ending inventory	16	23
Less: Beginning inventory	26	16
Budgeted purchase units of adjustable closures	600	432
Cost per unit of closures	$1.50	$1.50
Budgeted cost of purchases	$900.00	$648.00

Solution 1B:

Budgeted manufacturing overhead budget - Shadee Corp
Particulars	May	June
Budgeted Production units	610	425
Variable overhead cost per unit	$2.00	$2.00
Budgeted variable overhead cost	$1,220.00	$850.00
Budgeted fixed overhead cost	$800.00	$800.00
Budgeted manufacturing overhead	$2,020.00	$1,650.00

Solution 2:

Budgeted labor cost budget - Shadee Corp
Particulars	May	June
Budgeted Production units	610	425
Direct labor hours per unit	0.50	0.50
Budgeted direct labor hours	305	212.5
direct labor cost per hour	$11.00	$11.00
Budgeted direct labor cost	$3,355.00	$2,337.50

Solution 3 A:

Computation of budgeted manufacturing cost per visor - Shadee Corp.
Particulars	Per Unit
Direct Material	$3.50
Direct labor (0.5*$11)	$5.50
Variable manufacturing overhead	$2.00
Fixed manufacturing overhead	$1.80
Budgeted manufacturing cost per unit	$12.80

Solution 3B:

Computation of budgeted cost of goods sold - Shadee Corp
Particulars	May	June
Expected sales units	640	410
Manufacturing cost per unit	$12.80	$12.80
Budgeted cost of goods sold	$8,192.00	$5,248.00

Solution 4:

Budgeted Selling and adminstrative Expense - Shadee Corp
Particulars	May	June
Selling cost	$896.00	$574.00
Fixed and administrative expense	$1,700.00	$1,700.00
Budgeted Selling and administrative expenses	$2,596.00	$2,274.00