[The following information applies to the questions displayed below.] Iguana, In

Question

[The following information applies to the questions displayed below.]

Iguana, Inc., manufactures bamboo picture frames that sell for $20 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 $13 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 $4,800 ($400 per month) for expected production of 4,000 units for the year. Selling and administrative expenses are estimated at $450 per month plus $0.50 per unit sold.

     Iguana, Inc., had $11,000 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 $3,400. All other operating costs are paid during the month incurred. Monthly fixed manufacturing overhead includes $330 in depreciation. During April, Iguana plans to pay $2,000 for a piece of equipment.

March 365 April 430 May 480 June 580 July 555 August 605 Required Compute the following for lguana, Inc., for the second quarter (April, May, and June) April 2nd Quarter Total May June $ 8,600$ 1. 2. 3. 4. 5. 6. 7. Budgeted Sales Revenue Budgeted Production in Units |Budgeted Cost of Raw Material Purchases. Budgeted Direct Labor Cost Budgeted Manufacturing Overhead Budgeted Cost of Goods Sold. Total Budgeted Selling and Adm. Expenses 9.600$ 11,600$29,800 1,540 3,768?$ 5,528[ $ 9,308|$ 18,604 $ 3,380$,08513,390 $1,818 9,464?$ 17,1201 $ 33,812 740$ 2,095.00 450 520 570 $ $2,925$ 535 $ 556 S 727$ $ 665$ 690 $

Explanation / Answer

Budgeted Cash Receipt April May June Total March Sales in units A 430 480 580 1490 365 Sale Price 20 20 20 20 20 Sales in value 8600 9600 11600 29800 7300 Cash sales (80%) 6880 7680 9280 23840 5840 Credit sales (20%) 1720 1920 2320 5960 1460 Accounts Receivable (1460*50%) 730 730 April Sales (50%, 50% of credit sales) 860 860 1720 May sales 960 960 1920 June sales 1160 1160 Budgeted cash receipts 8470 9500 11400 29370 ans 1 working Purchase Budget April May June Total July Aug Units to be sold S 430 480 580 1490 555 605 Closing Inventory 40% of next month sales S*.4 192 232 222 222 242 Total Finised Goods 622 712 802 1712 797 Less: Beginning Inventory 172 192 232 172 222 Units to be produced 450 520 570 1540 575 April May June Qtr July Direct material Purchases Budget Budgeted Production 450 520 570 1540 575 Material per components 4 4 4 4 4 Materai needed for production M 1800 2080 2280 6160 2300 Add: Desired ending Direct Material Inventory (30% of next month needs M) 624 684 690 690 Totl Material requirement 2424 2764 2970 6850 Less; beginning Raw material Inventory 540 624 684 540 Material to be purchased 1884 2140 2286 6310 Cost per liner feet 2 2 2 2 Total cost of diret Material Purchses A 3768 4280 4572 12620 Cash Disbursement Schedule From march purchases (3400*20%) $680 $680 From April Purchases (80%, 20%) $3,014 $754 $3,768 From May Purchases $3,424 $856 $4,280 For June purchases (80%) $3,658 $3,658 Total B $3,694 $4,178 $4,514 $12,386 Direct labor Budget April May June Qtr Units to be produced 450 520 570 1540 No. of hours 0.5 0.5 0.5 0.5 Total no. of hours 225 260 285 770 Wage rate $13.00 $13.00 $13.00 $13.00 Total Direct labor cost $2,925 $3,380 $3,705 $10,010 Manufacturing overhead Budget No. of units produced 450 520 570 1540 Variable overhead rate 0.3 0.3 0.3 0.3 Total variable cost   `F 135 156 171 462 Fixed overhead Fixed overhead- others 70 70 70 210 Fixed overhead- depreciation d 330 330 330 990 Total fixed overhead Z 400 400 400 1200 Total manufacturing overhead T=F+Z 535 556 571 1662 Total cash variable manufacturing overhead (t-d) 205 226 241 672 Selling and administrative expenses Units sold 450 520 570 1540 Variable rate 0.5 0.5 0.5 0.5 Variable S & A exp 225 260 285 770 Fixed S & A exp $450 $450 $450 $1,350 Total S & A expenses $675 $710 $735 $2,120 Ans 2 Budgeted cash payments April May June Qtr Payment of Inventory $3,694.40 $4,177.60 $4,513.60 $12,385.60 Payment of Direct labor $2,925.00 $3,380.00 $3,705.00 $10,010.00 Payment of manufacturing overhead $205.00 $226.00 $241.00 $672.00 Payment of S & A exp $675.00 $710.00 $735.00 $2,120.00 Land Purchased $2,000.00 $2,000.00 Budgeted cash payments $9,499.40 $8,493.60 $9,194.60 $27,187.60 ans 3 Cash Budget April May June Total Beginning Cash Balance A $11,000 $10,971 $10,977 $11,000 Plus: Budgeted Cash Receipts B $8,470 $9,500 $11,400 $29,370 Less: Budgeted Cash Payments C $9,499 $8,494 $9,195 $27,188 Preliminary Cash Balance A+B-C $9,971 $11,977 $13,182 $13,182 Cash Borrowed/Repaid $1,000 -$1,000 $0 $0 Ending Cash Balance $10,971 $10,977 $13,182 $13,182

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