Rainwater corp expects to sell 560 umbrellas in may and 440, Ask an Expert

Accounting

Rainwater Corp. expects to sell 560 umbrellas in May and 440 in June. Each umbrella sells for $15. Rainwater%u2019s beginning and ending finished goods inventories for May are 70 and 45 units, respectively. Ending finished goods inventory for June will be 50 units. Each umbrella requires a total of $4.50 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 31 mechanisms on hand at May 1, 23 mechanisms at May 31, and 25 mechanisms at June 30. Additionally, Rainwater%u2019s fixed manufacturing overhead is $1,100 per month, and variable manufacturing overhead is $2.75 per unit produced.

Requirement 1:

Compute the budgeted cost of mechanisms purchased for May and June.

Requirement 2:

Compute the budgeted manufacturing overhead for May and June.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M9954431

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