Question

Required Information [The following Information applies to the questions displayed below.] guana, Inc., manufactures bamboo picture frames that sell for $20 each. Each frame requires 4 linear feet of bamboo, which costs $2.00 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 materlals Inventory should be 30 percent of next month's production. Expected unit sales (frames) for the upcoming months follow March 365 April 430 Мay June 480 58e July 555 605 August Variable manufacturing overhead is incurred at a rate of $0.30 per unit produced. Annual fixed manufacturing overhead is estimated to be $4,800 ($400 per month) for expected production of 4,000 units for the year. Selling and administrative expenses are estimated at $450 per month plus $0.50 per unit sold. guana, 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 materlals purchases for March 1 totaled $3,400. All other operating costs are paid during the month Incurred. Monthly fixed manufacturing overhead includes $330 in depreciation. During April, Iguana plans to pay $2,000 for a plece of equlpment.

Answer 1

Solution 1:

Sales Budget - Iguana Inc.
Particulars	April	May	June	2nd Quarter Total
Sales units	430	480	580	1490
Selling price per unit	$20.00	$20.00	$20.00	$20.00
Budgeted Sales Revenue	$8,600.00	$9,600.00	$11,600.00	$29,800.00

Solution 2:

Production Budget - Iguana Inc.
Particulars	April	May	June	2nd Quarter Total	July
Sales units	430	480	580	1490	555
Add: Desired ending inventory (40% of next month sales)	192	232	222	222	242
Less: Opening Inventory	172	192	232	172	222
Nos of Stapler to be produced	450	520	570	1540	575

Solution 3:

Raw Material Purchase Cost Budget - Iguana Inc.
Particulars	April	May	June	2nd Quarter Total
Unit to Produce	450	520	570	1540
Material needed per unit (In foot)	4	4	4	4
Material needed for unit to produce	1800	2080	2280	6160
Add: Desired units of material in ending inventory (30% of next month production)	624	684	690	690
Less: units of material in beginning inventory	540	624	684	540
Units of material to purchase	1884	2140	2286	6310
Cost per feet	$2.00	$2.00	$2.00	$2.00
Budgeted cost of raw material purchases	$3,768.00	$4,280.00	$4,572.00	$12,620.00

Solution 4:

Budgeted direct labor cost - Iguana Inc.
Particulars	April	May	June	2nd Quarter Total
Unit to Produce	450	520	570	1540
Direct labor required per unit (in hrs)	0.5	0.5	0.5	0.5
Required direct labor hours	225	260	285	770
Labor rate	$13.00	$13.00	$13.00	$13.00
Budgeted direct labor cost	$2,925.00	$3,380.00	$3,705.00	$10,010.00

Solution 5:

Budgeted manufacturing Overhead cost - Iguana Inc.
Particulars	April	May	June	2nd Quarter Total
Unit to Produce	450	520	570	1540
Variable Overhead rate	$0.30	$0.30	$0.30	$0.30
Variable Manufacturing Overhead	$135.00	$156.00	$171.00	$462.00
fixed Overhead	$400.00	$400.00	$400.00	$1,200.00
Budgeted manufacturing overhead	$535.00	$556.00	$571.00	$1,662.00

Solution 6:

Computation of Unit Product Cost - Iguana Inc.
Particulars	Per Unit Cost
Direct Material (4*$2)	$8.00
Direct labor (0.5 * $13)	$6.50
Variable manufacturing overhead	$0.30
Fixed manufacturing overhead ($4800 /4000)	$1.20
Unit Product Cost	$16.00

Budgeted Cost of goods sold- Iguana Inc.
Particulars	April	May	June	2nd Quarter Total
Unit sales	430	480	580	1490
Unit Product cost	$16.00	$16.00	$16.00	$16.00
Budgeted Cost of goods sold	$6,880.00	$7,680.00	$9,280.00	$23,840.00

Solution 7:

Budgeted Selling and admin. expense- Iguana Inc.
Particulars	April	May	June	2nd Quarter Total
Unit sales	430	480	580	1490
Variable Selling and admin. Rate	$0.50	$0.50	$0.50	$0.50
Variable Selling and admin. Expenses	$215.00	$240.00	$290.00	$745.00
Fixed Selling and admin. Expenses	$450.00	$450.00	$450.00	$1,350.00
Total Selling and admin. Expenses	$665.00	$690.00	$740.00	$2,095.00