Question

E8-6 Preparing Raw Materials Purchases and Manufacturing Overhead Budgets (LO 8-3c, e] Each visor requires a total of $4.50 in direct materials that includes an adjustable sosure that the company purchases from a supplier at a cost of $2.00 each. Shadee wants to have 31 closures on hand on May 1. 18 closures on May 31, and 26 closures on June 30. Additionally, Shadee's fixed manufacturing overhead is $1,300 per month, and variable manufacturing Overhead is $2.25 per unit produced Required: 1. Determine Shadee's budgeted cost of closures purchased for May and June (Hound your answers to 2 decimal places) May June Budgeted cost of closures Purchased 2. Determine Shadoe'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

Answer 1

1)

	May	June
Expected Sales	550	440
Add: desired ending Inventory	50	55
Total Units required	600	495
Less: Beginning Inventory	85	50
Units to be Produced	515	445
Units to be Produced (A)	515	445
Quantity of Closure needed Per unit (B)	1	1
Quantity needed for production(A*B)	515	445
Add: desired ending Inventory of Closures	18	26
Total Units required	533	471
Less: Beginning Inventory	31	18
Quantity to Purchase [C]	502	453
Cost per Closures (D)	$          2	$      2
Budgeted Cost of closures purchased (C*D)	$ 1,004	$ 906

2)

	May	June
Units to be Produced	515	445
Variable Manufacturing overhead – per unit	$2.25	$2.25
Variable overhead in dollars	$1,158.75	$1,001.25
Add: Fixed Manufacturing Overhead	$1,300.00	$1,300.00
Total Manufacturing Overhead cost	$2,458.75	$2,301.25