Question

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% of next month’s sales
• Ending direct materials inventory should be 30% of next month’s production.

Expected unit sales (frames) for the upcoming months follow:

March	350
April	400
May	450
June	550
July	525
August	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% is in cash. Of the credit sales, 50% is collected during the month of the sale, and 50% is collected during the month following the sale.

Of direct materials purchases, 80% is paid for during the month purchased and 20% 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.

1. Compute the budgeted cash receipts for Iguana. (Do not round your intermediate calculations. Round final answers to 2 decimal places.)

	April	May	June	2nd Quarter Total
Budgeted cash receipts

2. Compute the budgeted cash payments for Iguana. (Do not round your intermediate calculations. Round final answers to 2 decimal places.)

	April	May	June	2nd Quarter Total
Budgeted Cash Payments

3. Prepare the cash budget for Iguana. Assume the company can borrow in increments of $1,000 to maintain a $11,000 minimum cash balance. (Leave no cell blank enter “0” wherever required. Round your answers to 2 decimal places.)

	April	May	June	2nd Quarter Total
Beginning Cash Balance
Plus: Budgeted Cash Receipts				0.00
Less: Budgeted Cash Payments				0.00
Preliminary Cash Balance
Cash Borrowed / Repaid
Ending Cash Balance

Answer 1

Please hit LIKE button if this helped. For any further explanation, please put your query in comment, will get back to you.
Budgeted Cash Receipts:
	March	April	May	June	Total	July	Aug
Budgetes Sale units	350	400	450	550	1,400.0	525	575
Budgeted selling price	$                                           25.00	$          25.00	$           25.00	$           25.00	$           25.00	$           25.00	$           25.00
Budegeted sales revenue	$                                     8,750.00	$ 10,000.00	$   11,250.00	$   13,750.00	$   35,000.00	$   13,125.00	$   14,375.00
		April	May	June	Total
Cash Sale	80%	$          8,000	$           9,000	$         11,000	$         28,000
Credit Sale:
50% in Same Month		$          1,000	$           1,125	$           1,375	$           3,500
50% in Next month			$           1,000	$           1,125	$           2,125	1,375
March Sale		$              875			$               875
Total cash Receipts		$          9,875	$         11,125	$         13,500	$         34,500
Budgeted Production-Working
		April	May	June	Total	July	Aug
Budgetes Sale units		400	450	550	1,400	525	575
Add: Desired Endint inventory	40%	180	220	210	210	230
Total Need		580	670	760	1,610	755
Less: Beginning inventory		-160	-180	-220	-160	-210
Budgeted Production		420	490	540	1,450	545
Budgeted cash Payment for Material
		April	May	June	Total	July
Budgeted Production		420	490	540	1,450	545
Raw Material needed per unit		4	4	4	4	4
Total raw Material needed		1,680	1,960	2,160	5,800	2,180
Add: Desired Endint inventory	30%	588	648	654	654
Total Need		2,268	2,608	2,814	6,454
Less: Beginning inventory		-504	-588	-648	-504
Budgeted Purchases		1,764	2,020	2,166	5,950
Rate per unit of material		2.00	2.00	2.00	2.00
Budgeted dollar purchases		3,528	4,040	4,332	11,900
		April	May	June	Total	Payable
March Payable	$4,000*20%	$              800			$               800
80% in Same month	80%	$          2,822	$           3,232	$           3,466	$           9,520
20% in next month	20%		$               706	$               808	$           1,514	$               866
Total Payment for Purchases		$          3,622	$           3,938	$           4,274	$         11,834
Budgeted Cash Payment
		April	May	June	Total
Payment for Material Purchases		$          3,622	$           3,938	$           4,274	$         11,834
Payment for Direct Labor	$7.00 Per unit produced	$          2,940	$           3,430	$           3,780	$         10,150
Variable Manufacturing overhead	$0.40 Per unit produced	$              168	$               196	$               216	$               580
Fixed Manufacturing overhead	$900-$300 dep	$              600	$               600	$               600	$           1,800
Variable selling and Admin	$0.60 per unit sold	$              240	$               270	$               330	$               840
Fixed Selling and Admin		$              950	$               950	$               950	$           2,850
Equipment		$          2,000
					$                  -
Total budgeted cash payment		$        10,520	$           9,384	$         10,150	$         28,054
Cash Budget:
		April	May	June	Total
Beginning cash Balance		$        11,900	$         11,255	$         12,996	$         11,900
Add: Cash receipts		$          9,875	$         11,125	$         13,500	$         34,500
Less: cash payments		$      -10,520	$          -9,384	$       -10,150	$       -30,054
Preliminary Cash balance		$        11,255	$         12,996	$         16,346	$         16,346
Cash borrow/Repaid		$                 -	$                  -		$                  -
Ending Cash Balance		$        11,255	$         12,996	$         16,346	$         16,346