Question

Required information [The following information applies to the questions displayed below.] Shadee Corp. expects to sell 570 sun visors in May and 300 in June. Each visor sells for $28. 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. Each visor requires a total of $5.00 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 27 closures on hand on May 1, 21 closures on May 31, and 20 closures on June 30 and variable manufacturing overhead is $1.00 per unit produced. Suppose that each visor takes 0.90 direct labor hours to produce and Shadee pays its workers $11 per hour. Required: 1. Determine Shadee’s budgeted manufacturing cost per visor. (Note: Assume that fixed overhead per unit is $3.) 2. Compute the Shadee’s budgeted cost of goods sold for May and June.

Additional information:

• Selling costs are expected to be 8 percent of sales.
• Fixed administrative expenses per month total $1,700.

Required:

Determine Shadee's budgeted selling and administrative expenses for May and June. (Do not round your intermediate calculations. Round your answers to 2 decimal places.)

Answer 1

1. Determine Shadee's budgeted manufacturing cost per visor. DM (5 * 2) + DL (0.9 * 11 ) + VOH (1) + FOH (3) $ 23.90 2. Compute the Shadee's budgeted cost of goods sold for May and June. Total cost of DM purchases 5938 2848 Total cost of DL 5890.5 2821.5 Total OH 2380 1140 COGS 14208.5 6809.5 Determine Shadee's budgeted selling and administrative expenses for May and June. Selling expenses 1276.8 672 Administrative expenses 1700 1700 Total Selling and adm. Exp. 2976.8 2372 nenses

Shadee Corp.
Sales Budget
	May	June
Units sold	570	300
S.P	28	28
Sales	15960	8400
Production Budget
	May	June
Expected Unit Sales	570	300
Add:- Desired ending FG Units	75	60
Total Reqd. Units	645	360
Less:- Beginning FG Units	50	75
Reqd. prod. Units	595	285
Direct Materials Budget
	May	June
Units to be produced	595	285
DM p.u	5	5
Total MATERIAL needed for production	2975	1425
Add:- Desired ending DM	21	20
Total Reqd. Units	2,996	1,445
Less:- Beginning DM	27	21
DM purchases	2,969	1,424
Cost per pound	2	2
Total cost of DM purchases	5938	2848
Direct Labour Budget
	May	June
Units to be produced	595	285
DL p.u	0.9	0.9
Total hours needed for production	535.5	256.5
Wage rate	11	11
Total cost of DL	5890.5	2821.5
Mfg OH Budget
	May	June
Units produced	595	285
Rate ( 1 + 3 )	4	4
Total Mfg. OH	2380	1140
Selling expense
	May	June
Sales	15960	8400
Rate	0.08	0.08
Total exp.	1276.8	672
Budgeted Income Statement
	May	June
Sales	15960	8400
Less:- COGS
Total cost of DM purchases	5938	2848
Total cost of DL	5890.5	2821.5
Total OH	2380	1140
COGS	14208.5	6809.5
Gross Margin	1751.5	1590.5
Less:- Operating expenses
Selling expenses	1276.8	672
Administrative expenses	1700	1700
Total Selling and adm. Exp.	2976.8	2372
Net operating income	-1225.3	-781.5