Question

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Shadee Corporation expects to sell 600 sunshades in May and 800 in June. Each shade sells for $180. Shadee’s beginning and ending finished goods inventories for May are 75 and 50 shades, respectively. Ending finished goods inventory for June will be 60 shades.
Each shade requires a total of $40 in direct materials that includes 4 adjustable poles that cost $5.00 each. Shadee expects to have 120 poles in direct materials inventory on May 1, 80 poles in inventory on May 31, and 100 poles in inventory on June 30.
Suppose that each shade takes three direct labor hours to produce, and Shadee pays its workers $9 per hour. Additionally, Shadee’s fixed manufacturing overhead is $10,000 per month, and variable manufacturing overhead is $13 per unit produced.
Use the information and solutions presented to complete the requirements.
Determine Shadee’s budgeted manufacturing cost per shade. (Note: Assume that fixed overhead per unit is $20.)

Answer 1

The budgeted manufacturing cost per shade for Shadee Corporation, factoring in direct materials, labor, variable and fixed overhead costs, amounts to $100 per unit produced.

Step-by-step explanation:

To calculate the budgeted manufacturing cost per shade for Shadee Corporation, we need to determine the total cost (direct materials, direct labor, and both fixed and variable manufacturing overhead) and then divide by the number of units produced.

• Direct materials cost: $40 per shade.
• Direct labor cost: 3 hours × $9 per hour = $27 per shade.
• Variable manufacturing overhead: $13 per shade.
• Fixed manufacturing overhead per unit: $20 per shade (given in the scenario).

Adding these costs together: $40 (direct materials) + $27 (direct labor) + $13 (variable overhead) + $20 (fixed overhead) = $100 total cost per shade.

That the budgeted manufacturing cost per shade for Shadee Corporation is $100 per unit.