Question

Shadee Corp. expects to sell 600 sun visors in May and 800 in June. Each visor sells for $18. Shadee’s beginning and ending finished goods inventories for May are 75 and 50 units, respectively. Ending finished goods inventory for June will be 60 units.

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 $1.50 each. Shadee wants to have 30 closures on hand on May 1, 20 closures on May 31, and 25 closures on June 30. Additionally, Shadee's fixed manufacturing overhead is $1,000 per month, and variable manufacturing overhead is $1.25 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 Budgeled Cost of Closures Purchased 2. Determine Shadee's budget manufacturing overhead for May and June. (Do not round your intermediate calculations. Round your answers to 2 decimal places.) May June Budgeled Manufacturing Overhead

Answer 1

1
	May	June
Expected sales	600	800
Add: Ending finished goods inventory	50	60
Less: Beginning finished goods inventory	-75	-50
Budgeted production	575	810
X Required Closures Per Unit	1	1
Total Closures for Production	575	810
Add: Ending inventory	20	25
Less: Beginning inventory	-30	-20
Budgeted Purchases	565	815
X Cost of Closures	1.50	1.50
Budgeted cost of Closures purchased	847.50	1222.50
2
	May	June
Budgeted production	575	810
X Variable Overhead Rate	1.25	1.25
Budget Variable Overhead	718.75	1012.50
Fixed cost Overhead	1000	1000
Budgeted Manufacturing Overhead	1718.75	2012.50