Iguana, Inc., manufactures bamboo picture frames that sell for $25 each. Each fr
ID: 2581600 • Letter: I
Question
Iguana, Inc., manufactures bamboo picture frames that sell for $25 each. Each frame requires 4 linear feet of bamboo, which costs $2.00 per foot. Each frame takes approximately 30 minutes to build, and the labor rate averages $11 per hour. Iguana has the following inventory policies: Ending finished goods inventory should be 40 percent of next month’s sales. Ending raw materials inventory should be 30 percent of next month’s production. Expected unit sales (frames) for the upcoming months follow:
March 290
April 280
May 330
June 430
July 405
August 455
Required Compute the following for lguana, Inc., for the second quarter (April, May, and June) 2nd Quarter Total April May June 1. Budgeted Sales Revenue 7,000$ 8,2501$ 10,750 $ 26,000 1,090 9,020 5,995 8522454 0 0.00 370 3,080$ 1,650$ 2,035$ 2,310$ 420 Budgeted Production in Units Budgeted Cost of Raw Material Purchases 2. 300 $ 256 $ 3,372$ 4. Budgeted Direct Labor Cost 5.Budgeted Manufacturing Overhead 6. Budgeted Cost of Goods Sold 7. Total Budgeted Selling and Adm. Expenses 780$ 822$ References eBook & ResourcesExplanation / Answer
Cost of goods sold per unit:
Direct material=4*2=8
Direct labour=(30/60)*11=5.5
Varaiable mfg overhead=0.6
Fixed mfg overhead= 7200/3000=2.4
Total cost per unit=8+5.5+0.6+2.4=16.5
Budgeted cost of goods sold:
April=280*16.5=4620
May=330*16.5=5445
June=430*16.5=7095
Quarter 2=17160
Total selling and admin exp=Fixed +variable
=700+(0.5*units sold)
April=700+(0.5*280)=840
May=700+(0.5*330)=865
June=700+(0.5*430)=915
Total for Quarter 2=840+865+915=2620