Question

[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 $2.00 per foot. Each frame takes approximately 30 minutes to build, and the labor rate averages $12.00 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 April May June July August 275 250 300 400 375 425 Variable manufacturing overhead is incurred at a rate of $0.30 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 $650 per month plus $0.60 per unit sold. Iguano, Inc., hod $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 direct materials purchases, 80 percent is paid for during the month purchased and 20 percent is paid in the following month. Direct materials purchases for March 1 totaled $2,000. All other operating costs are paid during the month incurred. Monthly fixed manufacturing overhead includes $150 in depreciation. During April, Iguana plans to pay $3,000 for a piece of equipment.

Answer 1

Apr 250 May 300 Jun 400 Jul 375 Aug 425 120 160 150 170 Month Mar Unit 275 Sales(Units) Ending FG 100 INV(Units) Production (Units) DM Ending 81 Inventory(Units) DM used in Units) 270(370-340(460- 390(550- 395 100) 120) 160) 102 117 118.5 372 457 508.5 Month Budgeted sales Cash Sales for the month Credits sales for the month Apr ($) May ($) Jun ($) 25*250 = 6,250 25*300= 7500 25*400= 10,000 80% of 6,250= 80% of 7,500= 80% of 10,000= 5,000 6,000 8,000 6,250- 7,500- 10,000- 5,000=1,250 6,000=1,500 8,000=2,000 1250*50%=625 1500*50%=750|2000*50%=1000 687.50 750 Cash received from this month credit sales Cash received from previous month credit sales Total receipts 625 5000+625+687.5=63126000+750+625=8375 8000+1000+750=9,750

Jun ($) 508.5 * 8=4068 Month Apr ($) Budgeted DM 372 * 8=2976 Cost DM paid this month (0.8*2976)= 2780.8 May ($) 457 * 8=3656 (0.8*3656)+ (0.2*2976)= 3520 400+ (0.8*4068)+ (0.2*3656)=3985.6 270*6=1620 270*0.30=81 600-150=450 Labour cost Variable MFG cost (pm) Fixed MFG cost (pm) Selling and Admn cost (pm) Total Payments 340*6=2040 390*6 = 2340 340*0.30=102 390*0.30=117 600-150=450 6 00-150=450 650+(0.60*300)=830 650+(0.60*400)=890 650+ (0.60*250)=800 5927 +3000) = 8731.8 6942 7782.60 Month Apr ($) May($) Jun($) Beg Cash Bal Plus: Budg Cash Receipts Less: Budg Cash Payments Preliminary Balance Cash Borrowed/Paid Ending Cash Balance 10,800 6312.5 8731.8 8380.7 2000 10,380.7 10380.7 8375 6942 11813.7 11813.7 9750 7782.60 13781.1 2nd Quarter Total($) | 32,594.40 24,437.50 23,456.40 33,975.50 2,000 35,975.50 11,813.7 13,781.1