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

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

Iguana, 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:   

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 $0.50 per unit sold.

     Iguana, 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 equipment.

March 370 April 440 May 490 June 590 July 565 August 615 value: 35.00 points Required Inform PA8-1 Preparing Operating Budgets [LO 8-3a, b, c, d, e, f, g] Required Compute the following for Iguana, Inc., for the second quarter (April, May, and June) April 2nd Quarter Total May June 1. Budgeted Sales Revenue 2. Budgeted Production in Units 3. Budgeted Cost of Raw Material Purchases 4. Budgeted Direct Labor Cost 5. Budgeted Manufacturing Overhead 6. Budgeted Cost of Goods Sold 7· Total Budgeted Selling and Adm. Expenses 11,000$ 12,250$ 14,750|$ 38,000 1,570 5,815 16,075 4,060$ 10,990 2,428 0 9452,710.00 460 530 580 $ 4,810 $ 3,220 $ 784 $ 5,450$ 3,710 $ 812 $ 832$ $ 870$ 895 $

Explanation / Answer

Calculation of Budgeted Cost per Unit: Direct Material - 4 Feet X $2.50          10.00 Direct Labor - 0.50 Hrs X $14            7.00 Variable MOH            0.40 Fixed MOH - $7,200 / 4,500 Units            1.60 Budgeted Manufacturing Cost Per Unit          19.00 Calculation of Budgeted Cost of Goods Sold April May June 2nd Quarter Total Sales in Units              440             490                590            1,520 Cost per Unit                19                19                  19                  19 Budgeted Cost of Goods Sold          8,360          9,310          11,210          28,880

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