Refer to the information in E9-4 for Rainwater Corp. Each umbrella requires a total of ($3.50) in
Question:
Refer to the information in E9-4 for Rainwater Corp. Each umbrella requires a total of \($3.50\) in direct materials that includes an opening mechanism that the company purchases from a supplier at a cost of \($2.00\) each. Rainwater wants to have 30 mechanisms on hand at May 1, 20 mechanisms at May 31, and 25 mechanisms at June 30. Additionally, Rainwater’s fixed manufacturing overhead is \($1,000\) per month, and variable manufacturing overhead is \($1.25\) per unit produced.
Required:
1. Prepare Rainwater’s May and June raw materials purchases budget for these mechanisms.
2. Prepare Rainwater’s manufacturing overhead budget for May and June.
Data from E9-4
Rainwater Corp. expects to sell 600 umbrellas in May and 400 in June. Each umbrella sells for \($15\). Rainwater’s beginning and ending finished goods inventories for May are 75 and 50 units, respectively. Ending finished goods inventory for June will be 60 units.
Step by Step Answer:
Managerial Accounting
ISBN: 9780078110771
1st Edition
Authors: Stacey WhitecottonRobert LibbyRobert Libby, Patricia LibbyRobert Libby, Fred Phillips