Question

SB Problem PA8-1 to PA8-3 [The following information applies to the questions displayed below.] Iguana, Inc., manufactures bamboo picture frames that sell for $20 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 $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 April May June July August 365 430 480 580 555 605 Variable manufacturing overhead is incurred at a rate of $0.30 per unit produced. Annual fixed manufacturing overhead is estimated to be $4,800 ($400 per month) for expected production of 4,000 units for the year. Selling and administrative expenses are estimated at $450 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 $3,400. All other operating costs are paid during the month incurred. Monthly fixed manufacturing overhead includes $330 in depreciation. During April, Iguana plans to pay $2,000 for a piece of equipment.

Answer 1

Answer is given below

IGUANA INC Budgeted Income Statement For the Quarter Ending June May April $8,600.00 $6,880.00 $1,720.00 June $9,600.00 $11,600.00 $7,680.00 $9,280.00 $1,920.00 $2,320.00 2nd Quarter Total $29,800.00 $23,840.00 $5,960.00 Budgeted Sales Less: Budgeted Cost of goods sold Budgeted Gross margin Less: Operating expenses Budgeted Selling and administrative costs Budgeted Net Operating Income $665.00 $1,055.00 $690.00 $1,230.00 $740.00 $1,580.00 $2,095.00 $3,865.00 | May April $8,470.00 June $9,500.00 $11,400.00 2nd Quarter Total $29,370.00 Budgeted Cash Receipts 2 Budgeted Cash Payments Payments for Purchases Payments for Labor Payment for Manufacturing overhead Payments for Selling and administration expenses Payment for Equipment Total Cash payments April $3,694.40 $2,925.00 $205.00 $665.00 $2,000.00 $9,489.40 May June $4,177.60 $4,513.60 $3,380.00 $3,705.00 $226.00 $241.00 $690.00 $740.00 2nd Quarter Total $12,385.60 $10,010.00 $672.00 $2,095.00 $2,000.00 $27,162.60 $8,473.60 $9,199.60 Cash Budget for 2nd Quarter Beginning cash balance Add: Budgeted Cash Receipts Total Cash available Less: Budgeted Cash payments Preliminary cash balance Cash Borrowed/Repaid Ending Cash Balance April May June $11,000.00 $10,980.60 $11,007.00 $8,470.00 $9,500.00 $11,400.00 $19,470.00 $20,480.60 $22,407.00 $9,489.40 $8,473.60 $9,199.60 $9,980.60 $12,007.00 $13,207.40 $1,000.00 $1,000.00 $0.00 $10,980.60 $11,007.00 $13,207.40 2nd Quarter Total $11,000.00 $29,370.00 $40,370.00 $27,162.60 $13,207.40 $0.00 $13,207.40 Working notes: Sales Budget Budgeted Sales Budgeted Selling price Budgeted Sales (value) April 430 $20 $8,600 May June 480580 $20 $20 $9,600 $11,600 Quarter 1,490 $20 $29,800 Budgeted Cash Receipts Cash Sales Credit Sales Total Sales April $6,880 $1,720 $8,600 May $7,680 $1,920 $9,600 June $9,280 $2,320 $11,600 Quarter $23,840 $5,960 $29,800 $6,880.00 $7,680.00 $9,280.00 $23,840.00 Cash Sales Credit Sales March Month April Month May Month June Month Total Collection from Customers $730.00 $860.00 $860.00 $960.00 $960.00 $1,160.000 $9,500.00 $11,400.00 $730.00 $1,720.00 $1,920.00 $1,160.00 $29,370.00 $8,470.00 Production Budget | June July August April 430 580 Quarter 1,490 222 555 1921 242 Budgeted Sales Add: Closing inventory Total Needs Less: Opening Inventory Production Budget May 4801 232 712 1921 520 222 802 622 1,712 172 2321 172 1,540 450 570 575 Direct Material Purchase Budget April Quarter July May 520 June 570 1,540 1.800 Production units Material needed per production unit (feet of bamboo) Budgeted material needed for production Add: Closing inventory Total Needs Less: Opening Inventory Purchase Budget- Direct Material (Units) Purchase price Total Direct Material Purchase Budget (Value) 624 2,424 540 1,884 $2.00 $3,768 2,080 684 2,764 624 2,140 $2.00 $4,280 2,280 690 2,970 684 2,286 $2.00 $4,572 6,160 690 6,850 540 6,310 $2.00 $12,620 Expected Cash disbursements for Materials Purchases May June April $680.00 $3,014.40 March Purchase April Purchase May Purchase June Purchase Total purchase payment to Vendors $753.60 $3,424.00 Quarter $680.00 $3,768.00 $4,280.00 $3,657.60 $12,385.60 $856.00 $3,657.60 $4,513.60 $3,694.40 $4,177.60 Budgeted Direct Labor cost June 570 0.50 Quarter 1,540 Budgeted Production Budgeted Direct labor hour Total Direct labor hours Direct labor hour rate Budgeted Direct labor cost April 450 0.50 225 $13 $2,925 May 520 0.50 260 $13 $3,380 285 770 $13 $3,705 $10,010 Budgeted Manufacturing Overhead | June $171 Variable Manufacturing Overhead - $0.30 per unit produced Fixed Manufacturing Overhead-Cash Total Manufacturing overhead in cash Depreciation Budgeted Total Manufacturing Overhead $70 April $135 $70 $205 $330 $535 May $156 $700 $226 $330 $556 Quarter $462 $210 $672 $241 $990 $330 $571 $1,662 Budgeted Selling and Distribution expenses Variable Selling and administration expenses- $0.50 per unit sold Fixed Selling and administration expenses Budgeted Selling and administration expenses April $215 $450 $665 May $240 $450 $690 June $290 $450 $740 Quarter $745 $1,350 $2,095 Budgeted Cost of Goods Sold Budgeted Sales units Budgeted manufacturing cost Budgeted Cost of Goods sold April 4300 $16.00 $6,880 May 480 $16.00 $7,680 June 580 $16.00 $9,280 Quarter 1,490 $16.00 $23,840 Budgeted Manufacturing cost per unit Direct Material Direct Labor Variable Manufacturing overhead Fixed Manufacturing overhead Total Manufacturing cost per unit $8.00 $6.50 $0.30 $1.20 ($4,800/4,000 units) $16.00