Iguana, Inc., manufactures bamboo picture frames that sell for $25 each. Each fr
ID: 2511276 • Letter: I
Question
Iguana, Inc., manufactures bamboo picture frames that sell for $25 each. Each frame requires 4 linear feet of bamboo, which costs $2.50 per foot. Each frame takes approximately 30 minutes to build, and the labor rate averages $14 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 $0.40 per unit produced. Annual fixed manufacturing overhead is estimated to be $7,200 ($600 per month) for expected production of 4,500 units for the year. Selling and administrative expenses are estimated at $650 per month plus $0.50 per unit sold.
Iguana, Inc., had $11,200 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 $4,500. All other operating costs are paid during the month incurred. Monthly fixed manufacturing overhead includes $340 in depreciation. During April, Iguana plans to pay $3,500 for a piece of equipment.
1. Compute the following for Iguana, Inc., for the second quarter (April, May, and June).
2. Complete Iguana's budgeted income statement for quarter 2. (Round cost per unit in intermediate calculations and final answers to 2 decimal places.)
3. 1. Compute the budgeted cash receipts for Iguana. (Do not round your intermediate calculations. Round final answers 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.)
3. Prepare the cash budget for Iguana. Assume the company can borrow in increments of $1,000 to maintain a $10,000 minimum cash balance. (Leave no cell blank enter "0" wherever required. Round your answers to 2 decimal places.)
March 370 April 440 May 490 June 590 July 565 August 615Variable manufacturing overhead is incurred at a rate of $0.40 per unit produced. Annual fixed manufacturing overhead is estimated to be $7,200 ($600 per month) for expected production of 4,500 units for the year. Selling and administrative expenses are estimated at $650 per month plus $0.50 per unit sold.
Iguana, Inc., had $11,200 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 $4,500. All other operating costs are paid during the month incurred. Monthly fixed manufacturing overhead includes $340 in depreciation. During April, Iguana plans to pay $3,500 for a piece of equipment.
1. Compute the following for Iguana, Inc., for the second quarter (April, May, and June).
April May June 2nd Quarter Total 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. ExpensesExplanation / Answer
1)
3)
March April May June July Budgeted sales revenue(Units) A 440 units 490 units 590 units 565 units Selling price B 25.00 25.00 25.00 Revenue(A*B) 11,000.00 12,250.00 14750 1 Frame requires Bamboo 4.00 4.00 4 Raw Material bamboo 1,760.00 1,960.00 2,360.00 2,260.00 Cost per foot 2.50 2.50 2.50 Time taken by each frame .5 hours .5 hours .5 hours Total time taken 220 hours 245 hours 295 hours labour per hour 14.00 14.00 14.00 Variable manufacturirng overhead 0.40 0.40 0.40 Ending raw material inventory 588.00 708.00 678.00 Ending finished goods inventory 176 196.00 236.00 226 Budgeted units produced 460.00 530.00 580.00 Budgeted cost of raw material 4,400.00 4,900.00 5900 Budgeted direct labour cost 3080 3430 4130 Budgeted manufactuting ovrhead 184.00 212 232 Budgeted cost of goods sold 105.60 117.60 141.60 Budgetd selling and administrative 870.00 895.00 945.00