[The following information applies to the questions displayed below. Iguana, Inc
ID: 2565194 • Letter: #
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[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 $12 per hour. lguana 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: 360 420 470 570 545 595 March April June July August Variable manufacturing overhead is incurred at a rate of $0.20 per unit produced. Annual fixed manufacturing overhead is estimated to be $7.200 ($600 per month for expected production of 4,000 units for the year. Selling and administrative expenses are estimated at 50 e nont plus 50 pe, unit sold Iguana, Inc., had $10,800 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 $2,400. All other operating costs are paid during the month incurred. Monthly fixed manufacturing overhead includes $320 in depreciation. During April, Iguana plans to pay $4,100 for a piece of equipment.Explanation / Answer
Solution:
April
May
June
2nd Quarter total
1)
Budgeted Sales Revenue
$8,400
$9,400
$11,400
$390,400
2)
Budgeted Production in Units
440
510
560
1510
3)
Budgeted Cost of Raw Material Purchases
$2,766
$3,150
$3,369
$9,285
4)
Budgeted Direct Labor Cost
$2,640
$3,060
$3,360
$9,060
Refer working below
Part 1 – Budgeted Sales Revenue
Budgeted Sales Revenue
April
May
June
2nd Quarter total
Budgeted Unit Sales (a)
420
470
570
6,100
Per unit selling price (b)
$20
$20
$20
$64
Budgeted Sales Revenue in dollars (a*b)
$8,400
$9,400
$11,400
$390,400
Part 2 – Budgeted Production in Units
Budgeted Production in Units
April
May
June
July
August
Expected Units to be sold
420
470
570
545
595
Plus: Desired Finished Goods Ending Inventory (40% of next month's sales)
188
(470*40%)
228
(570*40%)
218
(545*40%)
238
(595*40%)
Total Needs
608
698
788
783
Less Beginning Finished Goods Inventory (Ending inventory of last month)
168
188
228
218
Budgeted Production in units
440
510
560
565
Part 3—Budgeted Cost of Raw Material Purchases
Budgeted Cost of Raw Material Purchases
April
May
June
July
Budgeted Production Units
440
510
560
565
Per Unit Raw Material linear feet of bamboo needed
4
4
4
4
Total Raw material needs for production
1,760
2,040
2,240
2,260
Add: Budgeted ending direct material Inventory (30% of next month production need)
612
672
678
Total Direct material needed
2,372
2,712
2,918
Less: Beginning Direct material Inventory
528
612
672
Budgeted Direct material required purchases units
1,844
2,100
2,246
Cost per linear feet
$1.5
$1.5
$1.5
Budgeted Cost of Raw Material Purchases
$2,766
$3,150
$3,369
Part 4 – Budgeted Direct Labor Cost
Budgeted Direct Labor Cost
April
May
June
2nd Quarter Total
Budgeted Production Units
440
510
560
Per Unit Direct Labor Hours required
0.50
0.50
0.50
Total Required Direct Labor Hours for production units
220
255
280
Direct Labor Rate per hour
$12
$12
$12
Budgeted Direct Labor Cost
$2,640
$3,060
$3,360
$9,060
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 part.
April
May
June
2nd Quarter total
1)
Budgeted Sales Revenue
$8,400
$9,400
$11,400
$390,400
2)
Budgeted Production in Units
440
510
560
1510
3)
Budgeted Cost of Raw Material Purchases
$2,766
$3,150
$3,369
$9,285
4)
Budgeted Direct Labor Cost
$2,640
$3,060
$3,360
$9,060
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