Iguana, Inc., manufactures bamboo picture frames that sell for $24 each. Each fr
ID: 2448977 • Letter: I
Question
Iguana, Inc., manufactures bamboo picture frames that sell for $24 each. Each frame requires 3 linear feet of bamboo, which costs $2.00 per foot. Each frame takes approximately 24 minutes to build, and the labor rate averages $8.00 per hour. Iguana has the following inventory policies Ending finished goods inventory should be 50 percent of next month's sales Ending raw materials inventory should be 20 percent of next month's production. Expected unit sales (frames) for the upcoming months follow: March April May 290 250 300 410 380 440 une July August Variable manufacturing overhead is incurred at a rate of $.30 per unit produced. Annual fixed manufacturing overhead is estimated to be $6,600.00 ($550.00 per month) for expected production of 4,100 units for the year. Selling and administrative expenses are estimated at $690.00 per month plus $.40 per unit sold Required Compute the following for lguana, Inc., for the second quarter (April, May, and June). (Round your dollar amounts to 2 decimal places and your per unit amounts to the nearest whole number. Round intermediate calculations to 1 decimal place for direct labor hours and to 2 decimal places for per unit costs.) 2nd Quarter otal April May June 1. Budgeted Sales Revenue 2. Budgeted Production in Units 3. Budgeted Cost of Raw Material Purchases 4. Budgeted Direct Labor Cost 5. Budgeted Manufacturing Overhead 6. Budgeted Cost of Goods Sold 7. Total Budgeted Selling and Adm. Expenses $ 6,000.007,200.00$ 9,840.00$23,040.00 1,025 0.00 3,280.00 1,957.50 0.00 2,454.00 275 355 395 $880.001,136.00$ 1,264.00 $ $ 632.50 $ 656.50 $ 668.50 $ 790.00 $ 810.00 854.00 $Explanation / Answer
Each unit of product requires two feet of bamboo and each feet of bamboo costs 2 dollars. So budgeted cost of raw materials purchased would be:
Budgeted cost per unit = 2x2 = 4
March
April
May
June
July
Production units
275
355
395
410
Ending inventory 20% of next month production
55
71
79
82
Beginning inventory ( previous months ending inventory
-55
-71
-79
Units purchased
291
363
398
cost per unit
4
4
4
Budgeted cost of raw material purchases
1164
1452
1592
Budgeted cost of goods sold would be Budgeted material cost + Direct labor cost + Budgeted manufacturing cost.
April
May
June
Production units
275
355
395
material cost ( 4 per unit)
1100
1420
1580
Labor cost
880
1136
164
manufacturing cost
632.5
656.5
668.5
Bugtede cost of goods sold
2612.5
3212.5
2412.5
March
April
May
June
July
Production units
275
355
395
410
Ending inventory 20% of next month production
55
71
79
82
Beginning inventory ( previous months ending inventory
-55
-71
-79
Units purchased
291
363
398
cost per unit
4
4
4
Budgeted cost of raw material purchases
1164
1452
1592