Question

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 $2.00 each. Shadee wants to have 33 closures on hand on May 1, 23 closures on May 31, and 21 closures on June 30 and variable manufacturing overhead is $1.75 per unit produced. Suppose that each visor takes 0.90 direct labor hours to produce and Shadee pays its workers $10 per hour. Additional information: Selling costs are expected to be 8 percent of sales. Fixed administrative expenses per month total $1,200. Required: Complete Shadee's budgeted income statement for the months of May and June. (Note: Assume that fixed overhead per unit is $2.00.) (Do not round your intermediate calculations. Round your answers to 2 decimal places.)

Answer 1

Check the explanation

Step-by-step explanation:

May June

Budgeted sales 10800 14400

(600*18) (800*18)

Less: cost of good sold 5970 7960

(9.95*600) (9.95*800)

Gross margin 4830 6440

Less: Operating expenses

Selling expenses (6%*Sales) 648 864

Fixed administrative expenses 1200 1200

Total operating expenses 1848 2064

Budgeted Net Operating Income 2982 4376

Unit product cost

Material $4

Direct labor (9*.3) 2.7

Variable manuafcturing overhead 1.25

Fixed overhead 2

Unit product cost $9.95