SB Exercise E8-5 to E8-10

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Shadee Corp. expects to sell 600 sun visors in May and 330 in June. Each visor sells for $30. Shadees beginning and ending finished goods inventories for May are 65 and 50 units, respectively. Ending finished goods inventory for June will be 70 units.

E8-6 (Algo) Preparing Direct Materials Purchases and Manufacturing Overhead Budgets [LO 8-3c, e]

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 33 closures on hand on May 1, 22 closures on May 31, and 27 closures on June 30. Additionally, Shadees fixed manufacturing overhead is $1,400 per month, and variable manufacturing overhead is $1.50 per unit produced.

Required:

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

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