Question

Iguana, 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 $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	335
April	370
May	420
June	520
July	495
August	545

Variable manufacturing overhead is incurred at a rate of $0.50 per unit produced. Annual fixed manufacturing overhead is estimated to be $9,000 ($750 per month) for expected production of 4,500 units for the year. Selling and administrative expenses are estimated at $850 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 $3,700. All other operating costs are paid during the month incurred. Monthly fixed manufacturing overhead includes $270 in depreciation. During April, Iguana plans to pay $4,200 for a piece of equipment.

5.

value:
4.00 points

Required information

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

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

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

Part 1: 2nd Qtr april june may 1 Budgeted sales revenue 2 budgeted production in units 3 budgted cost of raw material 4 budgeted direct labor cost 5 budgeted manufacturing overhead 6 budgted cost of goods sold 7 Total Budgeted selling and adm in istrative budget 39,300 11,100 12,600 15,600 390 460 510 1,360 4,750 4,110 5,115 13,975 2,925 3,825 3,450 10,200 945 980 1,005 2,930 7,400 8,400 10,400 26,200 1,035 1,060 1,110 3,205 Part 2: IGUANA, INC. Budgeted Income Statement April May June Quarter For the Quarter Ending June 11100.00 12600.00 15600.00 39300.00 7400.00 8400.00 10400.00 26200.00 Budgeted sales revenue Budgeted cost of goods sold 3700.00 4200.00 5200.00 13100.00 3205.00 Budgeted Gross Margin Budgeted Selling and Administrative Expenses 1035.00 1060.00 1110.00 Budgeted Net Operating Income 2665.00 3140.004090.00 9895.00

Part 3: 1cash re ceipts March sales (335 *30*20% *50 % ) April May Total June 1005.00 1005.00 8880.00 10080.00 12480.00 31440.00 cash sales April Sales 1110.00 of 2,220 50.00% 1110.00 of 1110.00 50,00% 2,220 1110.00 May- Sales of 2,520 50.00% 1260.00 1260.00 1260.00 1260.00 of 50.00% 2,520 June -Sales 1560.00 1560.00 of 50.00% 3,120 Budge ted cash receipts 10995.00 12450.00 15300.00 38745.00 2.Budge ted cash payments Inventory Purchase april june Quarter may 4028.00 4622.005042.00 13692.00 2925.00 3450.00 3825.00 10200.00 direct labor cost manufacturing overhead 2120.00 675.00 710.00 735.00 3205.00 selling expense 1035.00 1060.00 1110.00 4200.00 4200.00 Equipment Purchase 0 0 Budgeted cash payme nt 12863.00 9842.00 10712.00 33417.00 3) cash budget april 11000.00 10132.00 11740.00 11000.00 10995.00 12450.00 15300.00 38745.00 june Quarter may Beginning Cash Balance Add: Cash Collection 12863.00 9842.00 10712.00 33417.00 Less: Cash payments 9132.00 12740.00 16328.00 16328.00 1000.00-1000.00 Preliminary Cash Balance Borrowing/(Repayment) 0 10132.00 11740.00 16328.00 16328.00 Ending Cash Bal ance

Working Note 1.sales budget Budgeted units sal es April May June Quarter 370 420 520 1,310 x selling price per unit 30 30 30 30 Total Budgeted Sales Cash (80%) Credit (20%) 11,100 12,600 15,600 8,880 10,080 12,480 39,300 31,440 2,220 2,520 3,120 7,860 2) Production budget July May April June Budgeted units sales 520 370 420 495 198 218 168 208 Add: Desired En ding Inventory ( 40% of next month unit sale) Total Needs 628 718 713 538 Less: Beginning Inventory 148 168 208 198 Required production in units 390 460 510 515 3).direct material budget required production in units of fini shed goods April May June Quarter 390 460 510 1,360 4. x units of raw material needed per unit of finished goods units of raw material needed to meet production 4 4 4 1,840 1,560 2,040 5,440 Add: Desired Ending Inventory ( 30% of next month production need) 552 618 612 618 Total Needs 2,112 2,658 2,452 6,058 Less: Beginning Inventory 468 612 468 552 Required Inventory Purchase x cost per unit cost of raw material to be purchased 1,644 1,900 2,046 5,590 2.50 2.50 2.50 2.50 4,750 5,115 13,975 4,110

4).direct labor budget April May June Quarter required production in units of finished goods 1,360 390 460 510 x hours require perunit (30/60) 0.50 0.50 0.50 0.50 total hours required 195 230 255 680 x cost per hour direct labor cost 15 15 15 15 2,925 3,450 3,825 10,200 5.budgeted manufacturing overhe ad April May June Quarter required production in units of finished goods 390 460 510 1,360 x variable cost per unit 0.50 0.50 0.50 0.50 allocated variable overhead 195.00 230.00 255.00 680.00 fixed overhead 750.00 750.00 750.00 2,250.00 Total budgeted manufacturing overhead 980.00 1,005.00 2,930.00 945.00 -270.00 - 270.00 Less:depreciation 270.00 810.00 cash paid for manufacturing overhead 675.00 710.00 735.00 2,120.00 7). selling expense budget april june Quarter may Budgeted units sales x vari able expen se per unit vairable selling expense 370 420 520 1,310 0.50 0.50 0.50 0.50 260 185 210 655 add fixed expe nse 2,550 850 850 850 : total 1,035 1,060 1,110 3,205 6.cost of goods sold April May June Quarter unit sold 370 420 520 1,310 x unit cost** 20.00 20.00 20.00 20.00 cost of goods sold 7,400 8,400 10,400 26,200 *calculation of unit cost direct material (4*2.5) 10.00 direct labor (0.5*15) 7.50 variable manufacturing overhead 0.50 fixed manufacturing overhead (9000/4500) 2.00 unit cost 20.00

**cash payment for material purchase April May Total June March Purchase (3700*20%) 740.00 740.00 April Purchase 3288.00 of 3288.00 80.00% 4,110 822.00 20.00% of 822.00 4,110 May- Purchase 3800.00 of 80.00% 4,750 3800.00 950.00 950.00 20.00% of 4,750 June Purchase .00 4092.00 80.00% 5,115 4028.00 4622.00 5042.00 13692.00 Total Cash payment