Iguana, Inc., manufactures bamboo picture frames that sell for $30 each. Each fr
ID: 2557329 • Letter: I
Question
Iguana, Inc., manufactures bamboo picture frames that sell for $30 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 $0.20 per unit produced. Annual fixed manufacturing overhead is estimated to be $9,000 ($750 per month) for expected production of 5,000 units for the year. Selling and administrative expenses are estimated at $800 per month plus $0.50 per unit sold.
Iguana, Inc., had $11,800 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 $2,600. All other operating costs are paid during the month incurred. Monthly fixed manufacturing overhead includes $190 in depreciation. During April, Iguana plans to pay $3,400 for a piece of equipment.
March 295 April 290 May 340 June 440 July 415 August 465 Required 1. Compute the budgeted cash receipts for Iguana. (Do not round your intermediate calculations. Round final answers to 2 decimal places.) April May June 2nd Quarter Total Budgeted Cash Receipts 0.00 2. Compute the budgeted cash payments for lguana. (Do not round your intermediate calculations. Round final answers to 2 decimal places.) April May June 2nd Quarter Total Budgeted Cash Payments 0.00 3. Prepare the cash budget for Iguana. Assume the company can borrow in increments of $1,000 to maintain a $11,000 minimum cash balance. (Leave no cell blank enter "" wherever required. Round your answers to 2 decimal places.) April May June 2nd Quarter Total Beginning Cash Balance Plus: Budgeted Cash Receipts Less: Budgeted Cash Payments Preliminary Cash Balance Cash Borrowed/ Repaid Ending Cash Balance 0.00 0.00 0.00Explanation / Answer
Answer 1. Sales Budget April May June Total July August March Sales in Units 290.00 340.00 440.00 1,070.00 415.00 465 295 Sp Per Unit 30.00 30.00 30.00 30.00 30.00 30 30 Total Sales in $ 8,700.00 10,200.00 13,200.00 32,100.00 12,450.00 13,950 8,850 Cash Sales -80% 6,960.00 8,160.00 10,560.00 25,680.00 9,960.00 11,160 7,080 Credit Sales - 20% 1,740.00 2,040.00 2,640.00 6,420.00 2,490.00 2,790 1,770 Schedule of Expected Cash Collections from Sales April May June Total Cash Sales 6,960.00 8,160.00 10,560.00 25,680.00 Collection from Accounts Receivables Mar Sales 885.00 885.00 Apr Sales 870.00 870.00 1,740.00 May Sales 1,020.00 1,020.00 2,040.00 Jun Sales 1,320.00 1,320.00 Total cash Collections 8,715.00 10,050.00 12,900.00 31,665.00 Answer 2. Frame Production Budget April May June Total July August Sales In units 290.00 340.00 440.00 1,070.00 415.00 465 Add: Closing Inventory in units 136.00 176.00 166.00 166.00 186.00 Total Needs 426.00 516.00 606.00 1,236.00 601.00 Less: opening Inventory in uints (116.00) (136.00) (176.00) (116.00) (166.00) Required Production in Units 310.00 380.00 430.00 1,120.00 435.00 Raw Material Purchase Budget April May June Total July August Required Production in Units 310.00 380.00 430.00 1,120.00 435.00 - Bamboo required per Unit in Feet 4.00 4.00 4.00 4.00 4.00 Total Bamboo required for Production 1,240.00 1,520.00 1,720.00 4,480.00 1,740.00 - Add: Closing Raw Material Inventory 456.00 516.00 522.00 522.00 Total Needs 1,696.00 2,036.00 2,242.00 5,002.00 Less: opening Inventory in feets (372.00) (456.00) (516.00) (372.00) Raw Material Purchased in feets 1,324.00 1,580.00 1,726.00 4,630.00 Cost of raw Material per feet 2.50 2.50 2.50 2.50 2.50 Cost of raw Material Purchased 3,310.00 3,950.00 4,315.00 11,575.00 Schedule of Cash payments to Suppliers April May June Total Cash Payment Mar Purchases 520.00 - - 520.00 Apr Purchases 2,648.00 662.00 - 3,310.00 May Purchases - 3,160.00 790.00 3,950.00 June Purchases - - 3,452.00 3,452.00 Total Cash Payment to Suppliers 3,168.00 3,822.00 4,242.00 11,232.00 Budgeted Direct Labor Costs April May June Total July Required Production in Units 310.00 380.00 430.00 1,120.00 435.00 Lab. Hour required per unit 0.50 0.50 0.50 0.50 0.50 Total Labor Hours Required 155.00 190.00 215.00 560.00 217.50 Lab. Rate per Hour 14.00 14.00 14.00 14.00 14.00 Budgeted Direct Labor Costs 2,170.00 2,660.00 3,010.00 7,840.00 3,045.00 Budgeted Manufacturing Overhead April May June Total Required Production in Units 310.00 380.00 430.00 1,120.00 435.00 Variable MOH per Unit 0.20 0.20 0.20 0.20 0.20 Total Variable MOH 62.00 76.00 86.00 224.00 Total Budgetd Selling & Admn. Expenses April May June Total No. Of Units Sold 290.00 340.00 440.00 1,070.00 Variable Selling & Admn. Exp. Per Unit 0.50 0.50 0.50 0.50 Total Variable selling & Admn. Exp. 145.00 170.00 220.00 535.00 Budgeted Cash Payment April May June Total Cash paid for Raw Materials 3,168.00 3,822.00 4,242.00 11,232.00 Cash Paid for Direct Labor 2,170.00 2,660.00 3,010.00 7,840.00 Cash Paid for Variable MOH 62.00 76.00 86.00 224.00 Cash Paid for Fixed MOH 560.00 560.00 560.00 1,680.00 Cash Paid for Variable Selling & Admn. Exp. 145.00 170.00 220.00 535.00 Cash Paid for Fixed Selling & Admn. Exp. 800.00 800.00 800.00 2,400.00 Cash paid For Equipment 3,400.00 - - 3,400.00 Total Disbursements 10,305.00 8,088.00 8,918.00 27,311.00 Answer 3. Cash Budget April May June Total Beginning Cash Balance 11,800.00 11,210.00 12,172.00 11,800.00 Add: Budgeted Cash Receipt 8,715.00 10,050.00 12,900.00 31,665.00 Less: Budgeted Cash payments (10,305.00) (8,088.00) (8,918.00) (27,311.00) Preliminary Cash balance 10,210.00 13,172.00 16,154.00 16,154.00 Cash Borrowed / Repaid 1,000.00 (1,000.00) - - Ending Cash Balance 11,210.00 12,172.00 16,154.00 16,154.00