Question

Shadee Corp. expects to sell 510 sun visors in May and 420 in June. Each visor sells for $21. Shadee’s beginning and ending finished goods inventories for May are 80 and 45 units, respectively. Ending finished goods inventory for June will be 70 units.

Each visor requires a total of $4.50 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 35 closures on hand on May 1, 22 closures on May 31, and 24 closures on June 30 and variable manufacturing overhead is $2.00 per unit produced. Suppose that each visor takes 0.30 direct labor hours to produce and Shadee pays its workers $10 per hour.

Additional information:

• Selling costs are expected to be 8 percent of sales.
• Fixed administrative expenses per month total $1,300.

Required:

Complete Shadee's budgeted income statement for the months of May and June. (Note: Assume that fixed overhead per unit is $4.00.) (Do not round your intermediate calculations. Round your answers to 2 decimal places.)

Answer 1

A. 1 May (510 Units June (420 Units) 2 Particulars 3 Sale 10710 8820 4 Less 5 Direct Material 1890 2295 6 Direct Labour 1260 1530 7 Variable Manufacturing Overhead 1020 840 8 Fixed Manufacturing Overhead 1680 2040 9 10 Gross profit 3825 3150 11 Less 12 Selling Expenses(8% of sales) 705.6 856.8 1300 13 Fixed admin Expesnses 1300 14 Profit 1668.2 1144.4 15 16. CO

A. 1 May (510 Units) June (420 Units) 2 Particulars -510*21 420*21 3 Sale 4 Less 420*4.5 5 Direct Material 4.5*510 0.3*10*510 0.3*10*420 -2*420 6 Direct Labour Variable Manufacturing Overhead2*510 7 4*510 4*420 8 Fixed Manufacturing Overhead +B3-SUM(B5:B8) +C3-SUM(C5:C8) 10 Gross profit 11 Less 12 Selling Expenses(8% of sales) 13 Fixed admin Expesnses +C3*8% +B3* 8% 1300 1300 =+B10 - B12 - B13 +C10-C12-C13 14 Profit 15