Question

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Shadee Corp. expects to sell 640 sun visors in May and 310 in June. Each visor sells for $26. Shadee’s beginning and ending finished goods inventories for May are 85 and 55 units, respectively. Ending finished goods inventory for June will be 50 units.

1. Determine Shadee's budgeted total sales for May and June.

May June Budgeted Total Sales $16,640 $8,060 2. Determine Shadee's budgeted production in units for May and June. May June Budgeted Production (Units) 610 305 ------------------------------- Each visor requires a total of $4.00 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 32 closures on hand on May 1, 22 closures on May 31, and 22 closures on June 30. Additionally, Shadee’s fixed manufacturing overhead is $1,500 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.) 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 ------------------ Each visor requires a total of $4.00 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 32 closures on hand on May 1, 22 closures on May 31, and 22 closures on June 30. Additionally, Shadee’s fixed manufacturing overhead is $1,500 per month, and variable manufacturing overhead is $2.50 per unit produced. Each visor takes 0.80 direct labor hours to produce and Shadee pays its workers $12 per hour.    Additional information: Selling costs are expected to be 11 percent of sales. Fixed administrative expenses per month total $1,400. Required: 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.) May June Budgeted Selling and Administrative Expenses

Answer 1

• All working forms part of the answer itself.
• Amounts are in $
• Cost of closure purchased

	May	June
Budgeted Production (Units)	610	305
Closure Required for production [1 for 1 unit]	610	305
Ending inventory of visors Closure	22	22
Total requirement	632	327
(-) Opening inventory of Closure	32	22
Closures to be purchased	600	305
Cost per closure	$2	$2
Budgeted Cost of Closure purchased	$1200	$610

• Budgeted Manufacturing Overhead

	May	June
Cost of Closures	$1200	$610
Direct materials	$1220	$610
variable manufacturing overhead	$1525	$762.5
Fixed manufacturing overhead	$1500	$1500
Total Budgeted manufacturing Overhead	$5445	$3482.5

• Budgeted Selling & Administrative Overhead

	May	June
Units to be sold	640	310
Sale Price per unit	$26	$26
Total Sales	$16640	$8060
Selling Cost (11% of sale)	$1830.4	$886.6
Fixed administrative expenses	$1400	$1400
Total Budgeted Selling & Administrative expenses	$3230.4	$2286.6