Question

Shadee Corp. expects to sell 590 sun visors in May and 430 in June. Each visor sells for $28. Shadee’s beginning and ending finished goods inventories for May are 70 and 60 units, respectively. Ending finished goods inventory for June will be 60 units.

Each visor requires a total of $3.50 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 26 closures on hand on May 1, 19 closures on May 31, and 24 closures on June 30. Additionally, Shadee’s fixed manufacturing overhead is $1,300 per month, and variable manufacturing overhead is $2.50 per unit produced.

Required:

Determine Shadee's budgeted cost of closures purchased for May and June.

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

Answer 1