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.

1. Determine Shadee’s budgeted manufacturing cost per visor. (Note: Assume that fixed overhead per unit is $4.)

2. Compute the Shadee’s budgeted cost of goods sold for May and June.

Answer 1

Solution 1 and 2:

D AK УИ Computation of budgeted manufacturing cost per visor - Shadee Corp. Particulars Per Unit Direct Material $4.50 Direct labor (0.30*$10) $3.00 Variable manufacturing overhead $2.00 Fixed manufacturing overhead $4.00 8 10 11 12 Budgeted manufacturing cost per unit $13.50 13 14 15 June 16 17 18 Computation of budgeted cost of goods sold - Shadee Corp Particulars May Expected sales units 510 Manufacturing cost per unit $13.50 420 $13.50 Budgeted cost of goods sold $6,885.00 $5,670.00 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 et737 Sheet22 (3) Sheet369 (8) Sheet740 Sheet230 (5)