The following information applies to the questions displayed below lguana, Inc.,
ID: 2522807 • Letter: T
Question
The following information applies to the questions displayed below lguana, 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: March April May June July August 370 440 490 590 565 615 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 S0.50 per unit sold. guana, 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 equipmentExplanation / Answer
Solution:
Part 1 ---
Budgeted Sales Revenue
April
May
June
2nd Quarter total
Sales Units
440
490
590
Unit Selling Price
$25
$25
$25
Budgeted Sales Revenue in dollars
$11,000
$12,250
$14,750
$38,000
Part 2 – Budgeted Production in Units
Budgeted Production Units
April
May
June
2nd Quarter Total
July
Next Month's Sales Unit
490
590
565
615
Desired Ending Inventory Ratio to next months sales unit
40%
40%
40%
40%
Desired Ending Inventory
196
236
226
246
Budgeted Sales Units
440
490
590
565
Total Needs
636
726
816
811
Less: Beginning Finished Goods Inventory (ending inventory of last month)
176
196
236
226
Budgeted Production in Units
460
530
580
1570
585
Part 3 – Budgeted cost of raw materials purchases
Budgeted Cost of Raw Materials Purchases
April
May
June
2nd Quarter Total
July
Budgeted Production in Units (Refer Part 2)
460
530
580
585
Required Raw material per unit (linear feet)
4
4
4
4
Total Required Raw Material for Production (pounds)
1840
2120
2320
2340
Add: Desired Ending Raw Material Inventory (30% of next month's production need)
636
696
702
Less: Estimated Beginning Raw material inventory (ending inventory of last month)
552
636
696
Total Budgeted Purchases Raw Material (linear feet)
1924
2180
2326
Cost per foot
$2.50
$2.50
$2.50
Budgeted Cost of Raw materials purchases
$4,810.00
$5,450.00
$5,815.00
$16,075.00
Part 4 – Budgeted Direct Labor Cost
Budgeted Direct Labor Cost
April
May
June
2nd Quarter Total
Budgeted Production Units (Frames) (Refer Part 2)
460
530
580
Required Labor Hour per frame
0.50
0.50
0.50
Total Required Labor Hours
230
265
290
Labor Rate per hour
$14
$14
$14
Labor Cost Budget
$3,220
$3,710
$4,060
$10,990
Please fill the information in the given format as follows:
April
May
June
2nd Quarter Total
1)
Budgeted Sales Revenue
$11,000
$12,250
$14,750
$38,000
2)
Budgeted Production in Units
460
530
580
1570
3)
Budgeted Cost of Raw material purchases
$4,810
$5,450
$5,815
$16,075
4)
Budgeted Direct Labor Cost
$3,220
$3,710
$4,060
$10,990
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
440
490
590
Unit Selling Price
$25
$25
$25
Budgeted Sales Revenue in dollars
$11,000
$12,250
$14,750
$38,000
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