Question

guana, Inc., manufactures bamboo picture frames that sell for $30 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 $12 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	280
April	260
May	310
June	410
July	385
August	435

Variable manufacturing overhead is incurred at a rate of $0.40 per unit produced. Annual fixed manufacturing overhead is estimated to be $7,800 ($650 per month) for expected production of 3,000 units for the year. Selling and administrative expenses are estimated at $700 per month plus $0.50 per unit sold.

     Iguana, Inc., had $10,900 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 $2,500. All other operating costs are paid during the month incurred. Monthly fixed manufacturing overhead includes $160 in depreciation. During April, Iguana plans to pay $3,100 for a piece of equipment.

28.

Required information

Required:
Compute the following for Iguana, Inc., for the second quarter (April, May, and June).     

29.

Required information

Required:
1. Compute the budgeted cash receipts for Iguana. (Do not round your intermediate calculations. Round final answers to 2 decimal places.)



2. Compute the budgeted cash payments for Iguana. (Do not round your intermediate calculations. Round final answers to 2 decimal places.)

   

3. Prepare the cash budget for Iguana. Assume the company can borrow in increments of $1,000 to maintain a $10,000 minimum cash balance. (Leave no cell blank enter "0" wherever required. Round your answers to 2 decimal places.)

Answer 1

Production budget Budgeted cash collections March April June July May 310 August April 6,240 May 7,440 June 9,840 280 260 410 385 435 Particulars Expected sales units Closing inventory Finished goods (40% of next month sales) Opening inventory Units to be produced Cash sales Credit sales 50% in month of sale 104 124 164 104 124 154 174 164 154 174 400405261 50% in the following month TOTAL CASH COLLECTIONS 780 840 1,620 930 780 1,710 1,230 930 2,160 384 280 350 26 Budgeted cash payments Selling price Expected sales Cash (80%) Credit (20%) 30 8,400 6,720 1,680 18,400 30 7,800 6,240 1,560 7,800 30 9,300 7,440 1,860 9,300 30 12,300 9,840 2,460 12,300 30 11,550 9,240 2,310 11,550 30 13,050 10,440 2,610 13,050 80% in the month of purchases 20% in the following month TOTAL CASH PAYMENTS 2,408 500 2,920 602 3,212 730 3,942 2,908 3,522 TOTAL SALES