Iguana, Inc., manufactures bamboo picture frames that sell for $25 each. Each fr
ID: 2472108 • Letter: I
Question
Iguana, Inc., manufactures bamboo picture frames that sell for $25 each. Each frame requires 2 linear feet of bamboo, which costs $1.25 per foot. Each frame takes approximately 36 minutes to build, and the labor rate averages $8.00 per hour. Iguana has the following inventory policies:
Variable manufacturing overhead is incurred at a rate of $0.30 per unit produced. Annual fixed manufacturing overhead is estimated to be $6,600 ($550 per month) for expected production of 4,064 units for the year. Selling and administrative expenses are estimated at $630 per month plus $0.40 per unit sold.
Complete Iguana's budgeted income statement for quarter 2. (Round cost per unit and final answers to 2 decimal places.)
Iguana, Inc., manufactures bamboo picture frames that sell for $25 each. Each frame requires 2 linear feet of bamboo, which costs $1.25 per foot. Each frame takes approximately 36 minutes to build, and the labor rate averages $8.00 per hour. Iguana has the following inventory policies:
Explanation / Answer
Quarter - 2 Period is (Apr to June) Calculation of Ending Finished goods and Opening finished goods inventory Particulars April May June July Expected Sales Units 240 310 410 380 Add: Finished inventory (40% of next month's sale) 124 164 152 168 (Aug Sales * 40%) (420*40%) Less: Opening Finished Goods (40% of Current month's sale) 96 124 164 152 (Apr Sales * 40%) (300*40%) No fo Frames to be produce per month 268 350 398 396 Add: Closing Inventory of Raw material ( 20 % of next month Production) 70 79.6 79.2 Less: Opening raw mataerial ( 20 % of Current month Production) 53.6 70 79.6 Total Frames to be Purchase every Month 284.4 359.6 397.6 No of Linear bamboo feets Required 568.8 719.2 795.2 Each frame requires 2 Linear Feets of bamboo Cost Per Each Frame ($ 1.25 per feet) 1.25 1.25 1.25 Total raw material Cost Per Month 711 899 994 Income statement of Lgunua's for the Quarter - 2 Particulars April May June Total Total Production During the Month - A 268 350 398 1016 Expected Sales Units - B 240 310 410 960 Selling Price Per Unit 25 25 25 25 Total Sales - C 6000 7750 10250 24000 Less: Total Cost of Raw Material 711 899 994 2604 Direct Labour (Units Produced * 36 Minutes)/60 * $ 8 Per Hour) 1286.4 1680 1910.4 4876.8 Variable Manufacturing Overheads (Units produced * $ 0.3 per unit) (A*0.3) 80.4 105 119.4 304.8 Fixed Manufacturing Overheads ( $ 550 Per month) 550 550 550 1650 Variable Selling and Admin Overheads (Units Sold * $ 0.4 per unit) (B*0.4) 96 124 164 384 Fixed Selling and Admin Overheads ( $ 630 Per month) 630 630 630 1890 Total Cost - D 3353.8 3988 4367.8 11709.6 Net Income - (C-D) 2646.2 3762 5882.2 12290.4