Question

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 direct materials inventory should be 30 percent of next month's production. Expected unit sales (frames) for the upcoming months follow March 315 April Мay 330 388 June 480 July August 455 ses

Answer 1

B.                                       IGUANA, INC.
BUDGETED INCOME STATEMENT
FOR THE QUARTER ENDING JUNE
	April	May	June	2nd Quarter Total
BUDGETED SALES REVENUE	$          8,250.00	$           9,500.00	$      12,000.00	$        29,750.00
(SALES UNIT*SALES UNIT PER PRICE)	(330*25)	(380*25)	(480*25)
BUDGETED COST OF GOODS SOLD	$          6,600.00	$           7,600.00	$         9,600.00	$        23,800.00
	(330*20)	(380*20)	(480*20)
BUDGETED GROSS MARGIN	$          1,650.00	$           1,900.00	$         2,400.00	$          5,950.00
BUDGETED SELLING AND	$             815.00	$              840.00	$            890.00	$          2,545.00
ADMINISTRATIVE EXPENSES
BUDGETED NET OPERATING INCOME	$             835.00	$           1,060.00	$        1,510.00	$          3,405.00

Working: Cost of goods sold per unit =

Material Cost	$ 10.00	=2.5*4
Labor Cost	$    7.00	=14*0.5
Variable overhead	$    0.60	0.6
Fixed Overhead	$    2.40	=7200/3000
Cost per unit	$ 20.00