Look at rows 3 and 6. The following information applies to the questions display

Question

Look at rows 3 and 6.

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 $1.50 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 325 350 400 500 475 525 Variable manufacturing overhead is incurred at a rate of $0.30 per unit produced. Annual fixed manufacturing overhead is estimated to be $6,000 ($500 per month) for expected production of 5,000 units for the year. Selling and administrative expenses are estimated at $550 per month plus $0.60 per unit sold Iguana, Inc., had $12,000 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 $2,000. All other operating costs are pald during the month incurred. Monthly fixed manufacturing overhead Includes $250 in depreclation. During April, Iguana plans to pay $4,000 for a plece of equipment

Explanation / Answer

Particulars April may june july sales 350 400 500 475 add:ending inventory 160 200 190 210 less:beginning inventory 140 160 200 190 Budgeted production in units 370 440 490 495 raw materials required for production in feet 1480 1760 1960 1980 add:ending inventory 528 588 594 less:beginning inventory 444 528 588 Budgeted Raw material purchases in feet 1564 1820 1966 Budgeted cost of Raw material purchases@$1.5 per foot $2346 $2730 $2949 Particulars April may june Quarter Budgeted sales revenue $7000 $8000 $10000 $25000 Budgeted production in units 370 440 490 1300 Budgeted cost of Raw material purchases@$1.5 per foot $2346 $2730 $2949 $8025 Budgeted Direct labour cost $2405 $2860 $3185 $8450 Budgeted manufacturing overhead $611 $632 $647 $1890 Budgeted cost of goods sold $5362 $6222 $6781 $18365 Total budgeted selling and admin exp $760 $790 $850

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