Iguana, Inc., manufactures bamboo picture frames that sell for $30 each. Each fr
ID: 2467181 • Letter: I
Question
Iguana, Inc., manufactures bamboo picture frames that sell for $30 each. Each frame requires 3 linear feet of bamboo, which costs $3.00 per foot. Each frame takes approximately 30 minutes to build, and the labor rate averages $16.00 per hour. Iguana has the following inventory policies: Ending finished goods inventory should be 40 percent of next month's sales. Ending raw materials inventory should be 30 percent of next month's production. Expected unit sales (frames) for the upcoming months follow: Variable manufacturing overhead is incurred at a rate of $0.30 per unit produced. Annual fixed manufacturing overhead is estimated to be $5,700 ($500 per month) for expected production of 3,000 units for the year. Selling and administrative expenses are estimated at $720 per month plus $0.60 per unit sold. Iguana, Inc., had $11,500 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 $2,700. All other operating costs are paid during the month incurred. Monthly fixed manufacturing overhead includes $220 in depreciation. During April, Iguana plans to pay $3,700 for a piece of equipment. Required: Compute the budgeted cash receipts for Iguana. (Do not round your intermediate calculations. Round final answers to 2 decimal places.) 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 $11,000.00 minimum cash balance.Explanation / Answer
Answer 1 Budgeted cash receipts April May June Total Cash sales 7680 8880 11280 27840 Credit sale collection 1995 2070 2520 6585 Total Cash receipts 9675 10950 13800 34425 Working Months March April May June July August Sales (No.of frames) 345 320 370 470 420 495 Selling rate per frame (in $) 30 30 30 30 30 30 Sales (in $) 10350 9600 11100 14100 12600 14850 Cash sales (80%) in $ 8280 7680 8880 11280 10080 11880 Credit sales(20%) in $ 2070 1920 2220 2820 2520 2970 Credit sales collection - March sales 1035 1035 - April sales 960 960 - May sales 1110 1110 - June sales 1410 1410 Total Credit sale Cash collection 1035 1995 2070 2520 1410 0 Answer 2 Budgeted Cash Payment April May June Total Raw Material Purchases payments 3139.2 3688.2 3999.6 10827 Labour cost payments 2720 3280 3600 9600 Manufacturing overhead cost payments 382 403 415 1200 Selling & administrative overhead cost payments 912 942 1002 2856 Purchase of equipment 3700 3700 Budgeted Cash Payments 10853.2 8313.2 9016.6 28183 Calculation of Raw Material purchase payments Months March April May June July August Sales (No.of frames) 345 320 370 470 420 495 (+) Ending Finished goods inventory 128 148 188 168 198 (-) Opening Finished goods inventory 128 148 188 168 Production (No.of frames) 340 410 450 450 Raw material requirement for production (in feets) 1020 1230 1350 1350 (+) Ending Raw material inventory 306 369 405 405 (-) Opening Raw Material inventory 306 369 405 Raw Material Purchase (in feets) 1083 1266 1350 Rate per feet in $ 3 3 3 Raw Material Purchase cost in $ 3249 3798 4050 80% Purchases paid 2599.2 3038.4 3240 20% purchases paid - March Purchases 540 - April Purchases 649.8 - May Purchases 759.6 Budgeted Raw Material Payments in $ 3139.2 3688.2 3999.6 Calculation labour cost payments Months March April May June July August Production (No.of frames) 340 410 450 450 Time required for each frame (in minutes) 30 30 30 30 Total time required (in minutes) 10200 12300 13500 13500 Total time required (in hours) 170 205 225 225 Labour rate per hour (in $) 16 16 16 16 Direct Labour cost (in $) 2720 3280 3600 3600 Calculation Manufacturing overhead cost payments Months March April May June July August Production (No.of frames) 340 410 450 450 Variable Mfg Overhead cost per unit (in $) 0.3 0.3 0.3 0.3 Variable Mfg Overhead cost (in $) 102 123 135 135 Fixed Mfg Overhead cost (in $) 280 280 280 280 Total Manufacturing Overhead cost (in $) 382 403 415 415 Calculation selling & administrative overhead cost payments Months March April May June July August Sales (No.of frames) 345 320 370 470 420 495 Variable selling & admin cost per unit (in $) 0.6 0.6 0.6 0.6 0.6 Variable selling & admin cost (in $) 192 222 282 252 297 Fixed selling & admin cost (in $) 720 720 720 720 720 Total Selling & admin exp.payments 912 942 1002 972 1017 Answer 3 Cash Budget April May June 2nd Qaurter Total Beginning Cash Balance 11,500.00 11,321.80 12,958.60 11,500.00 Plus : Budgeted cash receipts 9,675.00 10,950.00 13,800.00 34,425.00 Less : Budgeted cash payments 10,853.20 8,313.20 9,016.60 28,183.00 Preliminary Cash balance 10,321.80 13,958.60 17,742.00 17,742.00 Plus : Cash Borrowed 1,000.00 - - 1,000.00 Less : Cash Repaid - 1,000.00 - 1,000.00 Ending Cash balance 11,321.80 12,958.60 17,742.00 17,742.00