Iguana, Inc., manufactures bamboo picture frames that sell for $30 each. Each fr
ID: 2559127 • 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 for Iguana. (Do not round your intermediate calculations. Round final answers to 2 decimal places.) April May June 2nd Quarter Total Budgeted Cash Receipts $ 9.000.0of $10.35000 $ 13.200.00|S 32.550.00 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 $12,000 minimum cash balance. (Leave no cell blank enter "o" wherever required. Round your answers to 2 decimal places.) May June 2nd Quarter Total 12,800.00 32,550.00 0.00 April $ 12,800.00 Beginning Cash Balance Plus: Budgeted Cash Receipts Less: Budgeted Cash Payments Preliminary Cash Balance Cash Borrowed /Repaid Ending Cash Balance 9,000.00 10,350.00 13,200.00 0.00 0.00Explanation / Answer
Required Budgets are as prepared below:
1. Sales Budget Iguana inc. Sales Budget For the quarter ended June 30 Month Particulars April May June Total July Sale Units (a) 300 350 450 1,100 425 *Price per unit (b) $30 $30 $30 $30 30 Total Sales $9,000 $10,500 $13,500 33,000 12750 Iguana inc. Schedule of expected Cash collections For the quarter ended June 30 Month Particulars April May June Total Beginning Accounts Receivable (a) 900 900 April Cash Sales 7,200 7,200 April Credit Sales 900 900 1,800 May Cash Sales 8,400 8,400 May Credit Sales 1,050 1,050 2,100 June Cash Sales 10,800 10,800 June Credit sales 1,350 1,350 Total collections 9,000 10,350 13,200 32,550 2. Production Budget Iguana inc. Production Budget For the quarter ended June 30 Month Particulars April May June Total Sale Units (a) 300 350 450 1,100 425 Planned ending units (b) 140 180 170 212 190 Beginning units (c ) 120 140 180 172 170 Planned production units (d)= (a+b-c) 320 390 440 1,140 445 3. Raw material Budget Iguana inc. Raw Material Purchase Budget For the quarter ended June 30 Month Particulars April May June Total Planned production units (a) 320 390 440 1,150 445 *Direct Material required per unit (b) 4.0 4.0 4.0 4.0 4 Direct Material Required for production (c ) 1,280 1,560 1,760 4,600 1780 Budgeted ending Direct Material (d) 468 528 534 837 Beginning Direct Material (e ) 384 468 528 675 Budgeted direct material purchase f= c+d-e 1,364 1,620 1,766 4,762 Cost per unit (g) $3 $3 $3 $3 BudgetedDM purchases $4,092 $4,860 $5,298 14,286 Iguana inc. Schedule of expected Cash payments For the quarter ended June 30 Month Particulars April May June Total Beginning Accounts Payable (a) (3,500*20%) $700 $700 April Purchases (b) $3,274 $818 $4,092 May Purchases (c ) $3,888 $972 $4,860 June Purchases (d) $4,238 $4,238 Total payments (a+b+c+d) $3,974 $4,706 $5,210 $13,890 4. Direct labour Budget Iguana inc. Direct Labour Budget For the quarter ended June 30 Month Particulars April May June Total Planned production units (a) 320 390 440 1,150 *Direct labour required per unit (b) 0.5 0.5 0.5 0.5 Budgeted Direct labour hours 160 195 220 575 Cost per direct labour hour 11 11 11 11 Budgeted Direct labour Cost $1,760 $2,145 $2,420 $6,325 5. Factory Overhead Budget Iguana inc. Factory Overhead Budget For the quarter ended June 30 Month Particulars April May June Total Units produced 320 390 440 1,150 Variable manufacturing overhead 96 117 132 345 Fixed manufacturing overhead 600 600 600 600 6. selling expense budget Iguana inc. Selling expense Budget For the quarter ended June 30 Month Particulars April May June Total Budgeted Sales 300 350 450 1,100 Selling exp (.60 per unit) 180 210 270 660 Fixed selling exp 850 850 850 2,550 Total expense 1,030 1,060 1,120 3,210 Iguana inc. Cash Budget For the quarter ended June 30 Month Particulars April May June Total Beginning Cash balance 12,800 10,840 12,562 12,800 Add: Budgeted Cash receipts $9,000 $10,350 $13,200 $32,550 cash available for use $21,800 $21,190 $25,762 $45,350 Less: cash Disbursements Direct Material $3,974 $4,706 $5,210 $13,890 Direct labour Cost $1,760 $2,145 $2,420 $6,325 Variable overhead $96 $117 $132 $345 Fixed overhead $600 $600 $600 $1,800 Selling expenses 1,030 1,060 1,120 3,210 Equipment purchase 3,500 3,500 Total disbusrement 10,960 8,628 9,482 29,070 Cash surplus/Deficit 10,840 12,562 16,280 16,280 Financing Borrowing 0 Repayment 0 Interest 0 Net cash from Financing 0 0 0 0 Budgeted ending cash balance 10,840 12,562 16,280 16,280