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 unlt sales (frames) for the upcoming months follow: March April May June July August 370 440 490 590 565 615 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 ative 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 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 $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 pa $3,500 for a piece of equipment. Prev 1 2 3 of 3 Next >

Answer 1

Solution 1:

Sales Budget - Iguana Inc.
Particulars	April	May	June	2nd Quarter Total
Sales units	440	490	590	1520
Selling price per unit	$25.00	$25.00	$25.00	$25.00
Budgeted Sales Revenue	$11,000.00	$12,250.00	$14,750.00	$38,000.00

Solution 2:

Production Budget - Iguana Inc.
Particulars	April	May	June	2nd Quarter Total	July
Sales units	440	490	590	1520	565
Add: Desired ending inventory (40% of next month sales)	196	236	226	226	246
Less: Opening Inventory	176	196	236	176	226
Budgeted production units	460	530	580	1570	585

Solution 3:

Material Purchase Budget - Iguana Inc.
Particulars	April	May	June	2nd Quarter Total
Unit to Produce	460	530	580	1570
Material needed per unit (In foot)	4	4	4	4
Material needed for unit to produce	1840	2120	2320	6280
Add: Desired units of material in ending inventory (30% of next month production)	636	696	702	702
Less: units of material in beginning inventory	552	636	696	552
Units of material to purchase	1924	2180	2326	6430
Cost per feet	$2.50	$2.50	$2.50	$2.50
Budgeted cost of raw material purchases	$4,810.00	$5,450.00	$5,815.00	$16,075.00

Solution 4:

Budgeted direct labor cost - Iguana Inc.
Particulars	April	May	June	2nd Quarter Total
Unit to Produce	460	530	580	1570
Direct labor required per unit (in hrs)	0.5	0.5	0.5	0.5
Required direct labor hours	230	265	290	785
Labor rate	$14.00	$14.00	$14.00	$14.00
Budgeted direct labor cost	$6,440.00	$7,420.00	$8,120.00	$21,980.00

Solution 5:

Budgeted Manufacturing Overhead - Iguana Inc.
Particulars	April	May	June	2nd Quarter Total
Unit to Produce	460	530	580	1570
Variable overhead cost per unit	$0.40	$0.40	$0.40	$0.40
Total variable overhead cost	$184.00	$212.00	$232.00	$628.00
Fixed overhead	$600.00	$600.00	$600.00	$1,800.00
Budgeted manufacturing overhead	$784.00	$812.00	$832.00	$2,428.00

Solution 6:

Compuatation of Unit Product Cost - Iguana Inc.
Particulars	Per Unit Cost
Direct Material (4*$2.50)	$10.00
Direct labor (0.5 * $14)	$7.00
Variable manufacturing overhead	$0.40
Fixed manufacturing overhead	$1.60
Unit Product Cost	$19.00

Budgeted Cost of goods sold - Iguana Inc.
Particulars	April	May	June	2nd Quarter Total
Estimated Unit sales	440	490	590	1520
Unit cost	$19.00	$19.00	$19.00	$19.00
Budgeted Cost of goods Sold	$8,360.00	$9,310.00	$11,210.00	$28,880.00

Solution 7:

Budgeted Selling and administrative expenses - Iguana Inc.
Particulars	April	May	June	2nd Quarter Total
Estimated Unit sales	440	490	590	1520
Variable selling expenses per unit	$0.50	$0.50	$0.50	$0.50
Total variable selling expenses	$220.00	$245.00	$295.00	$760.00
Fixed selling and administrative expenses	$650.00	$650.00	$650.00	$1,950.00
Total selling and administrative expenses	$870.00	$895.00	$945.00	$2,710.00