Question

The following information applies to the questions displayed below.] lguana, 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: March 370 April May 44C 490 590 June July August 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 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.

Answer 1

Solution:

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