Question
Shadee Corp. expects to sell 590 sun visors in May and 430 in June. Each visor sells for $21. Shadees beginning and ending finished goods
Shadee Corp. expects to sell 590 sun visors in May and 430 in June. Each visor sells for $21. Shadees beginning and ending finished goods inventories for May are 70 and 45 units, respectively. Ending finished goods inventory for June will be 70 units.
Each visor requires a total of $5.50 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 27 closures on hand on May 1, 16 closures on May 31, and 24 closures on June 30.
Additionally, Shadees fixed manufacturing overhead is $1,300 per month, and variable manufacturing overhead is $2.50 per unit produced. Each visor takes 0.30 direct labor hours to produce and Shadee pays its workers $10 per hour. Additional information: Selling costs are expected to be 6 percent of sales. Fixed administrative expenses per month total $1,300.
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