Iguana, Inc., manufactures bamboo picture frames that sell for $30 each. Each fr
ID: 2449201 • Letter: I
Question
Iguana, Inc., manufactures bamboo picture frames that sell for $30 each. Each frame requires 4 linear feet of bamboo, which costs $3.00 per foot. Each frame takes approximately 30 minutes to build, and the labor rate averages $10.00 per hour. Iguana has the following inventory policies: Ending finished goods inventory should be 40 percent of next months sales. Ending raw materials inventory should be 30 percent of next months production. Expected unit sales (frames) for the upcoming months follow: Variable manufacturing overhead is incurred at a rate of $0.20 per unit produced. Annual fixed manufacturing overhead is estimated to be $10,200 ($850 per month) for expected production of 6,000 units for the year. Selling and administrative expenses are estimated at $790 per month plus $0.50 per unit sold. Iguana, Inc., had $16,000 cash on hand on April 1... Of its sales, 80 percent is in cash. Of the credit sales, 50% is collected during the month of the sale, and 50% is collected during the month following the sale. Of raw materials purchases, 80 percent is paid for during the month purchased and 20 percent is paid in the following month. Raw materials purchases for March 1 totaled $3,400. All other operating costs are paid during the month incurred. Monthly fixed manufacturing overhead includes $290 in depreciation. During April, Iguana plans to pay $4,400 for a piece of equipment. Compute the budgeted cash receipts for Iguana. Compute the budgeted cash receipts for Iguana. Compute the budgeted cash payments for Iguana Prepare the cash budget for Iguana. Assume the company can borrow in increments of $ 1,000.00 to maintain a $ 15,000.00 minimum cash balance.Explanation / Answer
April May June Budgeted Cash receipts 11700 13200 15900 Mar April May June July Aug 415 390 440 540 490 565 Cash Sales 332 312 352 432 392 452 Credit Sales 83 78 88 108 98 113 Cash Receipts 9360 10560 12960 11760 13560 Credit Receipts 1245 1170 1320 1620 1470 Credit Receipts-2 1170 1320 1620 1470 1695 11775 13050 15900 14850 16725 Production Budget Mar April May June July Aug Forecasted unit sales 415 390 440 540 490 565 Add Planned finished goods ending inventory balance 156 176 216 196 226 0 Total production required 571 566 656 736 716 565 Less Beginning finished goods inventory 166 156 176 216 196 Products to be manufactured 405 410 480 520 520 Mar April May June July Aug Raw Materials Required for Production 1620 1640 1920 2080 2080 0 Add Planned ending inventory balance 492 576 624 624 0 0 Total raw materials required 2112 2216 2544 2704 2080 0 Less Beginning raw materials inventory 850 492 576 624 624 0 Raw materials to be purchased 1262 1724 1968 2080 1456 0 Purchase Cost 3786 5172 5904 6240 4368 Budgeted Cash Payments of IGUANA April may June Payment to Rawmaterial Crs( 20% of Previous month) 757.2 1034.4 1180.8 Payment to Rawmaterial Crs( 80% of Current month) 4137.6 4723.2 4992 Wages to labourer 2050 2400 2600 Selling & Admnistration Exp. 985 1010 1060 Purchase of Equipment 4400 0 0 Variable Overhead 82 96 104 Fixed Manufacturing Overhead(850-290) 560 560 560 Total Cash Payments 12971.8 9823.6 10496.8 Cash Budget of IGUANA April May June Begning Cash Balance 16000 15728.2 18104.6 Plus Budgeted Cash Receipts 11700 13200 15900 Less Budgeted Cash Payments 12971.8 9823.6 10496.8 Preliminary Cash Balance 14728.2 19104.6 23507.8 Cash Borrowed/Repaid 1000 -1000 0 Ending Cash Balance 15728.2 18104.6 23507.8