Iguana, Inc., manufactures bamboo picture frames that sell for $25 each. Each fr
ID: 2578056 • 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.
March 370 April 440 May 490 June 590 July 565 August 615 Required information 35.00 points PA8-1 Preparing Operating Budgets LO 8-3a, b, c, d, e, f gl Required: Compute the fellowing for lguana, Inc., for the second quarter (April, May, and June). April May June 1. Budgated Sales Revenua 2. Budgeted Product on in Unils 3. Budgeted Coet of Raw Material Purchases 4. Budgeted Direct Labor Cost 9,250 S 250 Budgeted Manufacuring Overtead 6. Budgeted Coet of Goods Sold. 7. Total Budgeted Seling and Adm. Expenses 0.00Explanation / Answer
Iguana Inc, Operating budget April May June 2nd Quarter total 1 Budgeted sales Revenue 11000 12250 14750 38000 2 Budgeted production in units 460 530 580 1570 3 Budgeted cost of raw material purchse 4810 5450 5815 16075 4 Budgeted direct labor cost 3220 3710 4060 10990 5 Budgeted manufacturing overhead 784 812 832 2428 6 Budgeted cost of goods sold 8814 9972 10707 29493 7 Total Budgeted selling & Admn. Expenses 870 895 945 2710 Budgeted Income Statement April May June 2nd Quarter total Budgeted sales Revenue 11000 12250 14750 38000 Budgeted cost of goods sold 8814 9972 10707 29493 Budgeted Gross Margin 2186 2278 4043 8507 Budgeted selling & Admn. Expenses 870 895 945 2710 Budgeted Net Operating Income 1316 1383 3098 5797 Working Notes Sales Budget Month Unit Sales Unit sale Price Sales Revenue Ending Finished Inventory in units March 370 25 9250 176 April 440 25 11000 196 May 490 25 12250 236 June 590 25 14750 226 July 565 25 14125 246 August 615 25 15375 Production Bughet Opening Finished goods Inventory -A Units sold-B Closing Finished goods Inventory-C Units manufactured D=B+C-A Raw Material(Bambo Feet)quantity required D*4 Opening Bamboo feet Inventory Closing Bamboo feet Inventory Bamboo Feet Invnentroy to be purchased cost of per Bamboo feet Total Raw Material Purchase Value Month March 370 176 552 April 176 440 196 460 1840 552 636 1924 2.5 4810 May 196 490 236 530 2120 636 696 2180 2.5 5450 June 236 590 226 580 2320 696 702 2326 2.5 5815 July 226 565 246 585 2340 702 0 August 246 615 0 Raw Material Purchase Value as calculated Payment for Direct Labor Payment of Monthly Fixed Manufacturing expenses Payment of Monthly Variable Manufacturing expenses Total Manufacturing Overhead Payment of Monthly Fixed sellign & administrative expenses Payment of Monthly Variable selling & administrative expenses Total Selling & administrative expenses Month March 3500 600 0 650 185 April 4810 3220 600 184 784 650 220 870 May 5450 3710 600 212 812 650 245 895 June 5815 4060 600 232 832 650 295 945 July 600 234 650 282.5 August 600 0 650 307.5