Question

Shadee Corp. expects to sell 590 sun visors in May and 310 in June. Each visor sells for $21. Shadee’s beginning and ending finished goods inventories for May are 75 and 40 units, respectively. Ending finished goods inventory for June will be 55 units.

E8-6 (Algo) Preparing Direct Materials Purchases and Manufacturing Overhead Budgets [LO 8-3c, e]

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, 18 closures on May 31, and 21 closures on June 30. Additionally, Shadee’s fixed manufacturing overhead is $1,600 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.

2. Determine Shadee's budget manufacturing overhead for May and June.