Question

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.         


Required:
1. Determine Shadee's budgeted cost of closures purchased for May and June. (Round your answers to 2 decimal places.)

             

2. Determine Shadee's budget manufacturing overhead for May and June. (Do not round your intermediate calculations. Round your answers to 2 decimal places.)

Answer 1

1.

	May	June
Units sold	600.00	800.00
Add Ending Inventory	20	25
Less beginning inventory	30	20
Closures purchased	590	805
Purchases cost per closure	$1.50	$1.50
Budgeted cost of closures purchased	$885	$1207.50

2.

	May	June
Fixed manufacturing overhead	$1,000	$1,000
Variable manufacturing overhead	1.25 x 575 = 718.75	1.25 x 810 = 1012.50
Budget manufacturing overhead	$1,719	$2,013

Answer 2

1)

	May	June
Units Sold	600	800
Add Ending Units	600+50=650	800+60=860
Less Starting Units	650-75=575	860-50=810
Add Closure End Units	575+20=595	810+25=835
Less Closure Start Units	595-30=565	835-20=815
Multiply Price of Closure	565x1.5=847.50	815x1.5=1222.50