The following information applies to the questions displayed below Iguana, Inc.,
ID: 2516294 • Letter: T
Question
The following information applies to the questions displayed below 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 $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: March April May June July August 285 270 320 420 395 445 Variable manufacturing overhead is incurred at a rate of $0.50 per unit produced. Annual fixed manufacturing overhead is estimated to be $8,400 ($700 per month) for expected production of 4,200 units for the year. Selling and administrative expenses are estimated at $750 per month plus $0.50 per unit sold. lguana, 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 $3,000. All other operating costs are paid during the month incurred. Monthly fixed manufacturing overhead includes $170 in depreciation. During April, Iguana plans to pay $3,200 for a piece of equipment.Explanation / Answer
Solution:
Part 1 – Budgeted Sales Revenue
Budgeted Sales Revenue
April
May
June
2nd Quarter total
Sales Units
270
320
420
Unit Selling Price
$30
$30
$30
Budgeted Sales Revenue in dollars
$8,100
$9,600
$12,600
$30,300
Part 2 -- Budgeted Production Units
Budgeted Production Units
April
May
June
2nd Quarter Total
Next Month's Sales Unit
320
420
395
Desired Ending Inventory Ratio to next months sales unit
40%
40%
40%
Desired Ending Inventory
128
168
158
Budgeted Sales Units
270
320
420
Total Needs
398
488
578
Less: Beginning Finished Goods Inventory (ending inventory of last month)
108
128
168
Budgeted Production in Units
290
360
410
1060
Part 3 --- Budgeted Cost of Raw Materials Purchases
Working for Budgeted Cost of Raw Materials Purchases
April
May
June
2nd Quarter Total
July
Next Month's Sales Unit
320
420
395
445
Desired Ending Inventory Ratio to next months sales unit
40%
40%
40%
40%
Desired Ending Inventory
128
168
158
178
Budgeted Sales Units
270
320
420
395
Total Needs
398
488
578
573
Less: Beginning Finished Goods Inventory (ending inventory of last month)
108
128
168
158
Budgeted Production in Units
290
360
410
415
Required Raw material per unit (linear feet)
4
4
4
4
Total Required Raw Material for Production (pounds)
1160
1440
1640
1660
Add: Desired Ending Raw Material Inventory (30% of next month's production need)
432
492
498
Less: Estimated Beginning Raw material inventory (ending inventory of last month)
348
432
492
Total Budgeted Purchases Raw Material (linear feet)
1244
1500
1646
Cost per foot
$3.00
$3.00
$3.00
Budgeted Cost of Raw materials purchases
$3,732.00
$4,500.00
$4,938.00
$13,170.00
Part 4 – Direct Labor Cost Budget
Budgeted Direct Labor Cost
April
May
June
2nd Quarter Total
Budgeted Production Units (Frames) (Refer Part 2)
290
360
410
Required Labor Hour per frame
0.50
0.50
0.50
Total Required Labor Hours
145.00
180.00
205.00
Labor Rate per hour
$13.00
$13.00
$13.00
Labor Cost Budget
$1,885.00
$2,340.00
$2,665.00
$6,890.00
Hope the above calculations, working and explanations are clear to you and help you in understanding the concept of question.... please rate my answer...in case any doubt, post a comment and I will try to resolve the doubt ASAP…thank you
Pls ask separate question for remaining parts.
Budgeted Sales Revenue
April
May
June
2nd Quarter total
Sales Units
270
320
420
Unit Selling Price
$30
$30
$30
Budgeted Sales Revenue in dollars
$8,100
$9,600
$12,600
$30,300
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.