Question

Shadee Corp. expects to sell 520 sun visors in May and 380 in June. Each visor sells for $16. Shadee’s beginning and ending finished goods inventories for May are 80 and 60 units, respectively. Ending finished goods inventory for June will be 60 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 $1.50 each. Shadee wants to have 31 closures on hand on May 1, 16 closures on May 31, and 24 closures on June 30. Additionally, Shadee’s fixed manufacturing overhead is $1,400 per month, and variable manufacturing overhead is $2.00 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?

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?

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 $1.50 each. Shadee wants to have 31 closures on hand on May 1, 16 closures on May 31, and 24 closures on June 30. Additionally, Shadee’s fixed manufacturing overhead is $1,400 per month, and variable manufacturing overhead is $2.00 per unit produced. Each visor takes 0.10 direct labor hours to produce and Shadee pays its workers $11 per hour.   

Additional information:

• Selling costs are expected to be 10 percent of sales.
• Fixed administrative expenses per month total $1,600.

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.)

May? June?

Answer 1

Solution 1:

Production Budget - Shadee Corp
Particulars	May	June
Expected sales units	520	380
Add: ending inventory	60	60
Less: Beginning inventory	80	60
Estimated production units of visor	500	380

Budgeted Purchase of cost of closures - Shadee Corp
Particulars	May	June
Budgeted Production units	500	380
Adjustable closure per unit	1	1
Estimated consumption of Adjustable Closures	500	380
Add: ending inventory	16	24
Less: Beginning inventory	31	16
Budgeted purchase units of adjustable closures	485	388
Cost per unit of closures	$1.50	$1.50
Budgeted cost of purchases	$727.50	$582.00

Solution 2:

Budgeted manufacturing overhead budget - Shadee Corp
Particulars	May	June
Budgeted Production units	500	380
Variable overhead cost per unit	$2.00	$2.00
Budgeted variable overhead cost	$1,000.00	$760.00
Budgeted fixed overhead cost	$1,400.00	$1,400.00
Budgeted manufacturing overhead	$2,400.00	$2,160.00

Solution 3:

Budgeted Selling & Administrative Expenses - Shadee Corp
Particulars	May	June
Budgeted sales	$8,320.00	$6,080.00
Selling cost	$832.00	$608.00
Fixed administrative expenses	$1,600.00	$1,600.00
Budgeted selling & Administrative expenses	$2,432.00	$2,208.00