Question

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Iguana, Inc., manufactures bamboo picture frames that sell for $30 each. Each frame requires 4 linear feet of bamboo, which costs $3.00 per foot. Each frame takes approximately 30 minutes to build, and the labor rate averages $13 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	285
April	270
May	320
June	420
July	395
August	445

Variable manufacturing overhead is incurred at a rate of $0.50 per unit produced. Annual fixed manufacturing overhead is estimated to be $8,400 ($700 per month) for expected production of 4,200 units for the year. Selling and administrative expenses are estimated at $750 per month plus $0.50 per unit sold.

     Iguana, Inc., had $11,000 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 $3,000. All other operating costs are paid during the month incurred. Monthly fixed manufacturing overhead includes $170 in depreciation. During April, Iguana plans to pay $3,200 for a piece of equipment.

Required:
Complete Iguana's budgeted income statement for quarter 2. (Round cost per unit in intermediate calculations and final answers to 2 decimal places.)

	IGUANA, INC. Budgeted Income Statement For the Quarter Ending June April May June 2nd Quarter Total Budgeted Gross Margin $0.00 $0.00 $0.00 $0.00 Budgeted Net Operating Income $0.00 $0.00 $0.00 $0.00

Answer 1

Solution:

C D E G 1 2. Computation of Unit Product Cost - Iguana Inc. Per Unit Cost $12.00 Particulars Direct Material (4*$3.00) Direct labor (0.5 * $13) Variable manufacturing overhead Fixed manufacturing overhead ($8400 /4200) 4 $6.50 5 $0.50 $2.00 6 7 8 $21.00 Unit Product Cost 9 10 11 12 Budgeted Income Statement - Iguana Inc. Аpril $8,100.00 $5,670.00 $2,430.00 13 Particulars 2nd Quarter Total May June $9,600.00 $12,600.00 $8,820.00 $3,780.00 $30,300.00 $21,210.00 $9,090.00 Budgeted Sales Revenue (Unit Sales *$30) Budgeted Cost of goods Sold (Units sales $21.00) Budgeted Gross Margin Selling and Administrative Expenses: Variable ($0.50 per unit) Fixed 14 $6,720.00 15 $2,880.00 16 17 $210.00 $750.00 $505.00 $135.00 $160.00 18 $2,250.00 $750.00 $750.00 19 20 $2,820.00 $6,335.00 $1,545.00 $1,970.00 Budgeted Net Operating Income 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 Sheet225 (2) Sheet157 (18) Sheet393 (3) et704 Sheet708