20 October, 03:47

# Each visor requires a total of \$4.00 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 30 closures on hand on May 1, 20 closures on May 31, and 25 closures on June 30 and variable manufacturing overhead is \$1.25 per unit produced. Suppose that each visor takes 0.30 direct labor hours to produce and Shadee pays its workers \$9 per hour. Required: 1. Determine Shadee's budgeted manufacturing cost per visor. (Note: Assume that fixed overhead per unit is \$2.) 2. Determine Shadee's budgeted cost of goods sold for May and June.

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1. 20 October, 04:45
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Part 1. Determine Shadee's budgeted manufacturing cost per visor.

Direct Materials 4.00

Direct Labor (0.30 hours*\$9.00) 2.70

Budgeted manufacturing cost 9.95

Therefore Shadee's budgeted manufacturing cost per visor is \$9.95

Part 2. Determine Shadee's budgeted cost of goods sold for May and June.

May June

Opening Stock of Finished Goods 0 0

Add Manufacturing Cost of Finished Goods 9.95 9.95

Less Closing Stock of Finished Goods 0 0

Cost of Goods Sold 9.95 9.95

Explanation:

Part 1. Determine Shadee's budgeted manufacturing cost per visor.

Manufacturing cost per visor = Direct Material+Direct labor+Manufacturing Overhead (variable + fixed)

Part 2. Determine Shadee's budgeted cost of goods sold for May and June.

Cost of goods sold = Opening Stock of finished goods + cost of finished goods manufactured-closing stock of finished goods