Preparing Raw Materials Purchases and Manufacturing Overhead Budgets
Refer to the information in E9-4 for Rainwater Corp. Each umbrella requires a total of $3.50 in direct materials that includes an opening mechanism that the company purchases from a supplier at a cost of $2.00 each. Rainwater wants to have 30 mechanisms on hand at May 1, 20 mechanisms at May 31, and 25 mechanisms at June 30. Additionally, Rainwater’s fixed manufacturing overhead is $1,000 per month, and variable manufacturing overhead is $1.25 per unit produced.
Required:
1.Prepare Rainwater’s May and June raw materials purchases budget for these mechanisms.
2. Prepare Rainwater’s manufacturing overhead budget for May and June.
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