Question

Shadee Corp. expects to sell 550 sun visors in May and 320 in June. Each visor sells for $20. Shadee's beginning and ending finished goods inventories for May are 90 and 60 units, respectively. Ending finished goods inventory for June will be 50 units. Suppose that each visor takes 0.40 direct labor hours to produce and Shadee pays its workers $11 per hour. Required: Determine Shadee's budgeted direct labor cost for May and June. (Do not round your intermediote values. Round your answers to 2 decimal ploces.)

Answer 1

Explanation: To determine Shadee Corp's budgeted direct labor cost for May and June, we need to calculate the total direct labor hours required for production and then multiply it by the labor rate.

1. Calculate the total units produced in May:

Total units produced = Units sold in May + Ending finished goods inventory in May - Beginning finished goods inventory in May

Total units produced = 550 + 60 - 90 = 520 units

2. Calculate the total direct labor hours required in May:

Total direct labor hours = Total units produced * Direct labor hours per unit

Total direct labor hours = 520 units * 0.40 hours = 208 hours

3. Calculate the direct labor cost for May:

Direct labor cost = Total direct labor hours * Labor rate

Direct labor cost = 208 hours * $11 per hour = $2,288

4. Calculate the total units produced in June:

Total units produced = Units sold in June + Ending finished goods inventory in June

Total units produced = 320 + 50 = 370 units

5. Calculate the total direct labor hours required in June:

Total direct labor hours = Total units produced * Direct labor hours per unit

Total direct labor hours = 370 units * 0.40 hours = 148 hours

6. Calculate the direct labor cost for June:

Direct labor cost = Total direct labor hours * Labor rate

Direct labor cost = 148 hours * $11 per hour = $1,628

Therefore, Shadee Corp's budgeted direct labor cost for May is $2,288 and for June is $1,628.