Iguana, Inc., manufactures bamboo picture frames that sell for $25 each. Each fr
ID: 2462012 • Letter: I
Question
Iguana, Inc., manufactures bamboo picture frames that sell for $25 each. Each frame requires 4 linear feet of bamboo, which costs $2.00 per foot. Each frame takes approximately 30 minutes to build, and the labor rate averages $12.00 per hour. Iguana has the following inventory policies
Ending raw materials inventory should be 30 percent of next month’s production.
Variable manufacturing overhead is incurred at a rate of $0.30 per unit produced. Annual fixed manufacturing overhead is estimated to be $7,200 ($600 per month) for expected production of 4,000 units for the year. Selling and administrative expenses are estimated at $650 per month plus $0.60 per unit sold.
Iguana, Inc., had $10,800 cash on hand on April 1. Of its sales, 80 percent is in cash. Of the credit sales, 50 percent is collected during the month of the sale, and 50 percent 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 $2,000. All other operating costs are paid during the month incurred. Monthly fixed manufacturing overhead includes $150 in depreciation. During April, Iguana plans to pay $3,000 for a piece of equipment.
Compute the budgeted cash receipts for Iguana. (Round your answer to 2 decimal places.)
2. Compute the budgeted cash payments for Iguana. (Do not round your intermediate calculations. Round final answers to 2 decimal places.)
Prepare the cash budget for Iguana. Assume the company can borrow in increments of $1,000.00 to maintain a $10,000.00 minimum cash balance. (Round your answers to 2 decimal places.)
Iguana, Inc., manufactures bamboo picture frames that sell for $25 each. Each frame requires 4 linear feet of bamboo, which costs $2.00 per foot. Each frame takes approximately 30 minutes to build, and the labor rate averages $12.00 per hour. Iguana has the following inventory policies
Explanation / Answer
1) Budgeted Cash Receipt
April May June July August
sale @$25 per unit 250 *$25 300*$25 400*$25 375*$25 425*$25
=6250 =7500 =10000 =9375 =10625
cash sales(80% of sale) 5000 6000 8000 7500 8500
50% of credit sale 625 750 1000 937.5 1062.5
50% in following month 687.5 625 750 1000 937.5
Budgeted cash receipt 6312.5 7375 9750 9437.5 10500
Note:- 80% is cash sale
20% is credit sales, 50 percent of which is collected during the month of the sale , And 50% is collected during the month following the sale
April May June July August
credit sale(20% of sale) 1250 1500 2000 1875 2125
50% of credit sale in next following month for the april month :
= (275 unit *$25 per unit *20% [credit sale] )*50% for next month
= $1375 *50%
= $687.5