Question

Shadee Corporation expects to sell 570 sun shades in May and 310 in June. Each shade sells for $155. Shadee’s beginning and ending finished goods inventories for May are 75 and 50 shades, respectively. Ending finished goods inventory for June will be 55 shades.

Each shade requires a total of $60.00 in direct materials that includes 4 adjustable poles that cost $10.00 each. Shadee expects to have 120 in direct materials inventory on May 1, 100 poles in inventory on May 31, and 100 poles in inventory on June 30.
Suppose that each shade takes three direct labor hour to produce and Shadee pays its workers $13 per hour. Additionally, Shadee’s fixed manufacturing overhead is $9,000 per month, and variable manufacturing overhead is $12 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 $16.)

Answer 1

The budgeted manufacturing cost per shade for Shadee Corporation is $120.90. This includes the costs of direct materials, direct labor, fixed manufacturing overhead, and variable manufacturing overhead.

Step-by-step explanation:

To determine Shadee Corporation's budgeted manufacturing cost per shade, we need to consider the different components of manufacturing cost. These include direct materials, direct labor, fixed manufacturing overhead, and variable manufacturing overhead.

The direct materials cost per shade is $60, which includes the cost of 4 adjustable poles ($10 each).

The direct labor cost per shade is calculated by multiplying the number of direct labor hours needed to produce one shade (3 hours) by the hourly rate paid to the workers ($13). This results in a direct labor cost of $39 per shade.

The fixed manufacturing overhead cost per shade is calculated by dividing the total fixed manufacturing overhead ($9,000) by the total number of shades produced in May and June (570 + 310 = 880), resulting in a fixed manufacturing overhead cost of $10.23 per shade.

The variable manufacturing overhead cost per shade is calculated by multiplying the variable manufacturing overhead rate ($12 per unit produced) by the total number of shades produced in May and June (570 + 310 = 880), resulting in a variable manufacturing overhead cost of $10.67 per shade.

To calculate the budgeted manufacturing cost per shade, we add up the costs of direct materials, direct labor, fixed manufacturing overhead, and variable manufacturing overhead. This gives us a total manufacturing cost per shade of $120.90.