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.

A) Suppose that each visor takes 0.30 direct labor hours to produce and Shadee pays its workers $9 per hour.        

Required:
Determine Shadee's budgeted direct labor cost for May and June. (Do not round your intermediate calculations. Round your answers to 2 decimal places.)
B) 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 and variable manufacturing overhead is $1.25 per unit produced. Suppose that each visor takes 0.30 direct labor hours to produce and Shadee pays its workers $9 per hour.     

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

            

2. Determine Shadee's budgeted cost of goods sold for May and June. (Do not round your intermediate calculations. Use rounded cost per unit in intermediate calculations.)
C)

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. Each visor takes 0.30 direct labor hours to produce and Shadee pays its workers $9 per hour.   

Additional information:  

• Selling costs are expected to be 6 percent of sales.
• Fixed administrative expenses per month total $1,200.

   
Required:
Determine Shadee's budgeted selling and administrative expenses for May and June.
D)

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 and variable manufacturing overhead is $1.25 per unit produced. Suppose that each visor takes 0.30 direct labor hours to produce and Shadee pays its workers $9 per hour.        

Additional information:     

• Selling costs are expected to be 6 percent of sales.
• Fixed administrative expenses per month total $1,200.

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

Answer 1

A	Budgeted Direct Labor Cost
		May	June
	Budgeted sales in units for the month	600	800
	Add: Ending inventory of finished goods	50	60
	Less: Beginning inventory	(75)	(50)
	Budgeted production in units	575	810
	Labor Hours required to produce each units ( hours )	0.30	0.30
	Total budgeted labor hours required ( Hours )	172.5	243
	Direct Labor Cost per Hour ( $ )	9	9
	Budgted Direct Labor Cost ( $ )	1,552.50	2,187.00
	Budgeted Manufacturing cost per visor
B		$
1	Direct Materials	4
	Direct Labor ( 0.30 labor hours x $ 9 per hour )	2.7
	Overhead costs;
	Variable manufacturing overhead per unit	1.25
	Fixed manufacturing overhead per unit	2
	Budgeted Manufacturing cost per visor	9.95
2		May	June
	Budgeted sales in units for the month	600	800
	Budgeted Manufacturing cost per visor	9.95	9.95
	Budgeted Cost of Goods Sold ($ )	5,970	7,960
C		May	June
	Budgeted sales in units for the month	600	800
	Selling price per unit ( $ )	18	18
	Budgeted Sales value ($ )	10,800	14,400
	Determination of Shadee's budgeted selling and administrative expenses for May and June.
		May	June
		$	$
	Variable selling costs ( 6% of sales )	648	864
	Fixed administrative expenses per month	1200	1200
	Budgeted Selling and admin exepenses	1,848	2,064
	Budgeted Income Statement
D		May ($)	June ($)
	Budgeted Sales value ($ )	10,800	14,400
	Less: Cost of goods sold	(5,970)	(7,960)
	Budgeted Gross profit	4,830	6,440
	Less: Budgeted Selling and admin exepenses	(1,848)	(2,064)
	Budgeted net income	2,982	4,376