Question

Iguana, Inc., manufactures bamboo picture frames that sell for $25 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 $15 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	375
April	450
May	500
June	600
July	575
August	625

Variable manufacturing overhead is incurred at a rate of $0.50 per unit produced. Annual fixed manufacturing overhead is estimated to be $6,000 ($500 per month) for expected production of 5,000 units for the year. Selling and administrative expenses are estimated at $550 per month plus $0.70 per unit sold.

     Iguana, Inc., had $11,100 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 $5,500. All other operating costs are paid during the month incurred. Monthly fixed manufacturing overhead includes $350 in depreciation. During April, Iguana plans to pay $2,000 for a piece of equipment.

#1. Compute the following for Iguana, Inc., for the second quarter (April, May, and June).     
a. Budgeted Sales Revenue

b. Budgeted Production in Units

c. Budgeted Cost of Raw Material Purchases

d. Budgeted Direct Labor Cost

e. Budgeted Manufacturing Overhead

f. Budgeted Cost of Goods Sold

g. Total Budgeted Selling and Admin Expenses

Answer 1

Answer:-

  

Computation of the following for lguana, Inc., for the second quarter (April, May, June)
		April	May	June	2nd Quarter Total
1	Budgeted Sales Revenue	11,250	12,500	15,000	38,750
2	Budgeted Production in Units	470	540	590	1,600
3	Budgeted Cost of Raw Materials Purchases	5,640	6,480	7,080	19,200
4	Budgeted Direct Labor Cost	3,525	4,050	4,425	12,000
5	Budgeted Manufacturing Overhead	735	770	795	2,300
6	Budgeted Cost of Goods Sold	9,900	11,300	12,300	33,500
7	Total Budgeted Selling and Adm. Expenses	865	900	970	2,735

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