Shadee Corporation expects to sell 600 sun shades in May and 800 in June. Each shade sells for $180. Shadee’s beginning and ending finished goods inventories for May are 75 and 50 shades, respectively. Ending finished goods inventory for June will be 60 shades. Each shade requires a total of $40 in direct materials that includes 4 adjustable poles that cost $5.00 each. Shadee expects to have 120 poles in direct materials inventory on May 1, 80 poles in inventory on May 31, and 100 poles in inventory on June 30. Suppose that each shade takes three direct labor hour to produce and Shadee pays its workers $9 per hour. Additionally, Shadee’s fixed manufacturing overhead is $10,000 per month, and variable manufacturing overhead is $13 per unit produced. Additional information: Selling costs are expected to be 6 percent of sales. Fixed administrative expenses per month total $12,000.

Shadee Corporation expects to sell 600 sun shades in May and 800 in June. Each shade sells for $180. Shadee’s beginning and ending finished goods inventories for May are 75 and 50 shades, respectively. Ending finished goods inventory for June will be 60 shades. Each shade requires a total of $40 in direct materials that includes 4 adjustable poles that cost $5.00 each. Shadee expects to have 120 poles in direct materials inventory on May 1, 80 poles in inventory on May 31, and 100 poles in inventory on June 30. Suppose that each shade takes three direct labor hour to produce and Shadee pays its workers $9 per hour. Additionally, Shadee’s fixed manufacturing overhead is $10,000 per month, and variable manufacturing overhead is $13 per unit produced. Additional information: Selling costs are expected to be 6 percent of sales. Fixed administrative expenses per month total $12,000.

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter12: Fainancial Statement Analysis

Section: Chapter Questions

Problem 87PSB

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Additional information:

Selling costs are expected to be 6 percent of sales.
Fixed administrative expenses per month total $12,000.

Required:

Prepare Shadee’s budgeted income statement for the months of May and June.

Everyhting else is right except for the June value for budgeted cost of goods sold.

SHADEE CORPORATION
Budgeted Income Statement
Budgeted Sales
Budgeted Cost of Goods Sold
Budgeted Gross Margin
Budgeted Selling and Administrative Expenses
Budgeted Net Operating Income
$
$
$
May
108,000 $
60,000
48,000
18,480
29,520
June
144,000
20,640

Definition Definition Basic financial report that forecasts estimated profits, revenue, and expenses for the company in the coming year or months. Budgeted income statements are helpful for companies in planning for the future, making better decisions, and allocating available resources more effectively and efficiently.

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