Question

Shadee Corp. expects to sell 530 sun visors in May and 380 in June. Each visor sells for $20. Shadee’s beginning and ending finished goods inventories for May are 75 and 60 units, respectively. Ending finished goods inventory for June will be 65 units.

SB Exercise E8-5 to E8-10 The following information applies to the questions displayed below.] Shadee Corp. expects to sell 530 sun visors in May and 380 in June. Each visor sells for $20. Shadee's beginning and ending finished goods inventories for May are 75 and 60 units, respectively. End ing finished goods inventory for June will be 65 units References Section Break SB Exercise E8-5 to E8-10 value Required information 2.00 points E8-6 Preparing Raw Materials Purchases and Manufacturing Overhead Budgets [LO 8-3c, e Each visor requires a total of $5.50 in direct materials that includes an adjustable closure that the company purchases from a supplier at a cost of $2.50 each. Shadee wants to have 34 closures on hand on May 1, 18 closures on May 31, and 200 closures on June 30. Additionally, Shadee's fixed manufacturing overhead is $1,300 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 Budgeted Cost of Closures Purchased 2. Determine Shadee'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 Hints References eBook & Resources Hint #1

Answer 1

1. Budgeted Cost of Closures Purchased:
	May	June
Budgeted Cost of Closures to be Purchased      [Refer working note 1]	$1,247.50	$967.50
2. Budgeted Manufacturing Overhead:
	May	June
Budgeted Manufacturing Overhead          [Refer working note 2]	$1,943.75	$1,781.25

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Working note 1 - Calculation of Budgeted Cost of Closures Purchased:
	May	June
No. of Visors to be Produced           (Refer working Note 3)	515	385
Budgeted number of Closures needed for the above production (In Units)                   [To manufacture one visor, one adjustable closure is needed]	515	385
Add: Desired ending Inventory of Closures	18	20
Total Inventory of closures required	533	405
Less: Beginning Inventory	34	$18
Number of Closures to be purchased               (a)	499	387
Purchase Cost per Closure                                  (b)	$2.50	$2.50
Budgeted Cost of Closures to be Purchased   (a x b)	$1,247.50	$967.50
*Note – Beginning Inventory for June = Ending Inventory for May = 18 closures

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Working note 2 - Calculation of Budgeted Manufacturing Overhead for May and June
	May	June
No. of Visors to be Produced         [Refer working note 3]             (a)	515	385
Variable manufacturing overhead per Unit produced                      (b)	$1.25	$1.25
Total Variable manufacturing overhead                                          (a x b)	$643.75	$481.25
Add: Fixed Manufacturing Overhead	$1,300	$1,300
Budgeted Manufacturing Overhead	$1,943.75	$1,781.25

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Working note 3 - Budgeted production in units
	May	June
Budgeted Sales (in units)	530	380
Add: Desired Ending Inventory	60	65
Total required Units	590	445
Deduct: Beginning Inventory	75	60
No. of Visors to be Produced	515	385