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 $1.50 each. Shadee wants to have 30 closures on hand on May 1, 20 closures on May 31, and 25 closures on June 30 and variable manufacturing overhead is $1.25 per unit produced. Suppose that each visor takes 0.30 direct labor hours to produce and Shadee pays its workers $9 per hour. Required: 1. Determine Shadee's budgeted manufacturing cost per visor. (Note: Assume that fixed overhead per unit is $2.) 2. Determine Shadee's budgeted cost of goods sold for May and June.

Part 1. Determine Shadee's budgeted manufacturing cost per visor.

Direct Materials 4.00

Variable Manufacturing Overhead 1.25

Direct Labor (0.30 hours*$9.00) 2.70

Fixed Manufacturing Overhead 2.00

Budgeted manufacturing cost 9.95

Therefore Shadee's budgeted manufacturing cost per visor is $9.95

Part 2. Determine Shadee's budgeted cost of goods sold for May and June.

May June

Opening Stock of Finished Goods 0 0

Add Manufacturing Cost of Finished Goods 9.95 9.95

Less Closing Stock of Finished Goods 0 0

Cost of Goods Sold 9.95 9.95

Explanation:

Part 1. Determine Shadee's budgeted manufacturing cost per visor.

Manufacturing cost per visor = Direct Material+Direct labor+Manufacturing Overhead (variable + fixed)

Part 2. Determine Shadee's budgeted cost of goods sold for May and June.

Cost of goods sold = Opening Stock of finished goods + cost of finished goods manufactured-closing stock of finished goods