Question

Required information (The following information applies to the questions displayed below.) Iguana, 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 direct 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 350 400 450 550 525 575 Variable manufacturing overhead is incurred at a rate of $0.40 per unit produced. Annual fixed manufacturing overhead is estimated to be $10,800 ($900 per month) for expected production of 4,000 units for the year. Selling and administrative expenses are estimated at $950 per month plus $0.60 per unit sold. Iguana, Inc., had $11,900 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 direct materials purchases, 80 percent is paid for during the month purchased and 20 percent is paid in the following month. Direct materials purchases for March 1 totaled $4,000. All other operating costs are paid during the month incurred. Monthly fixed manufacturing overhead includes $300 in depreciation. During April, Iguana plans to pay $2,000 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 S 0.00

Answer 1

Particulars	April	May	June	Total
Budgted Sales	$10,000	$11,250	$13,750	$35,000
Less: Direct materials	$4,000	$4,500	$5,500	$14,000
Less: Direct labor	$2,800	$3,150	$3,850	$9,800
Less: Manufacturing overhead	$1,060	$1,080	$1,120	$3,260
Budgted Gross Margin	$2,140	$2,520	$3,280	$7,940
Fixed selling and administrative exp	$950	$950	$950	$2,850
Variable selling and administrative exp	$240	$270	$330	$840
Total selling and administrative exp	$1,190	$1,220	$1,280	$3,690
Budgted Net operating income	$950	$1,300	$2,000	$4,250

Working Notes:

Direct materials	April	May	June
units sold	400	450	550
Each unit requires	4	4	4
Total material required	1600	1800	2200
Cost of each material	$2.50	$2.50	$2.50
Cost of Direct materials	$4,000	$4,500	$5,500

Manufacturing overhead	April	May	June
Variable	$160	$180	$220
Fixed	$900	$900	$900
Total	$1,060	$1,080	$1,120