Iguana, Inc., manufactures bamboo picture frames that sell for $30 each. Each fr
ID: 2556373 • 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 $11 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 $9,600 ($800 per month) for expected production of 4,000 units for the year. Selling and administrative expenses are estimated at $850 per month plus $0.60 per unit sold.
Iguana, Inc., had $12,800 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 $3,500. All other operating costs are paid during the month incurred. Monthly fixed manufacturing overhead includes $200 in depreciation. During April, Iguana plans to pay $3,500 for a piece of equipment.
References
March 300 April 300 May 350 June 450 July 425 August 475 Required 1. Compute the budgeted cash receipts tor lguana (Do not round your intermediate calculations. Round final answers to 2 decimal places. May 2nd Quarter Budgcted Cash Rcccpts 0.00 2. Compute the budgeted cash payments for lguana. (Do not round your intermediate calculations. Round final answers to 2 docimal places.) April May June 2nd Quarter Budgeled Cash Payments 3. Prepare the cash budget cu ana Assumle lhe corn any can borre in increments Drs 00 to maintain ? $ 2 DOD minimum cash balance Leave no cell blank enter wherever required. Round your ans vers to 2 decimal plac es. April May June 2nd Quarter Total Eeginnin Cash Balance Plus: Budgeted Cash Recelpt: Less: Budgeted Cash Payments Preliminary Cash Balance Cash Borrowed Repaid Ending Cash Balance 0.00 0.00Explanation / Answer
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Working:
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April May June Total Budgeted cash collections 9000 10350 13200 32550