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Iguana, Inc., manufactures bamboo picture frames that sell for Tk. 25 each. Each frame requires 4 feet of bamboo, which costs Tk. 2.00 per foot. Each frame takes approximately 30 minutes to build, and the labor rate averages Tk. 12.00 per hour. Iguana has the following inventory policies: 1) Ending finished goods inventory should be 40 percent of next month’s sales. 2) Ending direct materials inventory should be 30 percent of next month’s production. Expected unit sales (frames) for the upcoming months follow: March: 275, April:250, May: 300, June: 400, July: 375, August: 425 Variable manufacturing overhead is incurred at a rate of Tk. 0.30 per unit produced. Annual fixed manufacturing overhead is estimated to be Tk. 7,200 (Tk. 600 per month) for expected production of 4,000 units for the year. Selling and administrative expenses are estimated at Tk. 650 per month plus Tk. 0.60 per unit sold. Iguana, Inc., had Tk. 10,800 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 purchase for March 1 totaled Tk. 2,000. All other operating costs are paid during the month incurred. Monthly fixed manufacturing overhead includes Tk. 150 in depreciation. During April, Iguana plans to pay Tk. 3,000 for a piece of equipment. Prepare the following for Iguana, Inc., for the second quarter (April, May, and June). Include each month as well as the quarter 2 total for each budget. 1. Sales budget. 2. Production budget. 3. Direct materials purchase budget. 4. Direct labor budget. 5. Manufacturing overhead budget. 6. Budgeted cost of goods sold. 7. Selling and administrative expenses budget
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Iguana | |||||
Ans 1 | April | May | June | Total | Note |
Budgeted Sales units | 250.00 | 300.00 | 400.00 | 950.00 | A |
Sell price per unit | 25.00 | 25.00 | 25.00 | B | |
Budgeted Sales Revenue | 6,250.00 | 7,500.00 | 10,000.00 | 23,750.00 | C=A*B |
Cash sale is 80% | 5,000.00 | 6,000.00 | 8,000.00 | 19,000.00 | D=C*80% |
Credit sale is 20% | 1,250.00 | 1,500.00 | 2,000.00 | 4,750.00 | E=C*20% |
Ans 2- Production Budget | April | May | June | Total | July | August | Note |
Budgeted Sales units | 250.00 | 300.00 | 400.00 | 950.00 | 375.00 | 425.00 | See A |
Add: Closing | 120.00 | 160.00 | 150.00 | 150.00 | 170.00 | I= 40% of A of next month. | |
Less: Opening | 100.00 | 120.00 | 160.00 | 100.00 | 150.00 | J= 40% of A of same month. | |
Production Budget | 270.00 | 340.00 | 390.00 | 1,000.00 | 395.00 |
Ans 3- Material Purchase Budget | April | May | June | Total | July | Note |
Production Budget | 270.00 | 340.00 | 390.00 | 1,000.00 | 395.00 | See J |
Bamboo required per unit | 4.00 | 4.00 | 4.00 | 4.00 | K | |
Bamboo required | 1,080.00 | 1,360.00 | 1,560.00 | 4,000.00 | 1,580.00 | L=K*J |
Add: Closing | 408.00 | 468.00 | 474.00 | 474.00 | M= 30% of L of next month. | |
Less: Opening | 324.00 | 408.00 | 468.00 | 324.00 | N= 30% of L of same month. | |
Material Purchase Budget (foot) | 1,164.00 | 1,420.00 | 1,566.00 | 4,150.00 | ||
Cost per foot | 2.00 | 2.00 | 2.00 | O | ||
Material Purchase Budget (cost) | 2,328.00 | 2,840.00 | 3,132.00 | 8,300.00 | P=N*O |
Ans 4- Direct Labor Budget | April | May | June | Total | Note |
Production Budget | 270.00 | 340.00 | 390.00 | 1,000.00 | See J |
Labor Hour required per unit | 0.50 | 0.50 | 0.50 | K | |
Labor Hour required | 135.00 | 170.00 | 195.00 | 500.00 | L=K*J |
Cost per Hour | 12.00 | 12.00 | 12.00 | O | |
Direct Labor Budget | 1,620.00 | 2,040.00 | 2,340.00 | 6,000.00 | P=N*O |
Ans 5- Manufacturing overhead Budget | |||||
Variable manufacturing overhead Budget | April | May | June | Total | |
Production Budget | 270.00 | 340.00 | 390.00 | 1,000.00 | See J |
Variable manufacturing overhead per unit | 0.30 | 0.30 | 0.30 | S | |
Variable manufacturing overhead Budget | 81.00 | 102.00 | 117.00 | 300.00 | T=J*S |
Fixed manufacturing overhead | 600.00 | 600.00 | 600.00 | 1,800.00 | |
Manufacturing overhead Budget | 681.00 | 702.00 | 717.00 | 2,100.00 | |
Ans 7- Selling & admin expenses Budget | |||||
Variable Selling & admin expenses Budget | April | May | June | Total | |
Budgeted Sales units |
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$3.00 per foot. Each frame takes approximately 30 minutes to build,
and the labor rate averages $15 per hour. Iguana has the following
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Expected unit sales (frames) for the upcoming months
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$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
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Ending direct materials inventory should be 30 percent of next
month’s production.
Expected unit sales (frames) for the upcoming months follow:
March...
Iguana, Inc., manufactures bamboo picture frames that sell for $25 each. Each frame requires 4 linear...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...
Iguana, Inc., manufactures bamboo picture frames that sell for $25 each. Each frame requires 4 linear...Iguana, Inc., manufactures bamboo picture frames that sell for
$25 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 $12 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...
Iguana, Inc., manufactures bamboo picture frames that sell for $25 each. Each frame requires 4 linear...Iguana, Inc., manufactures bamboo picture frames that sell for
$25 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 $11 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...
Iguana, Inc., manufactures bamboo picture frames that sell for $25 each. Each frame requires 4 linear...Iguana, Inc., manufactures bamboo picture frames that sell for
$25 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 $12.00 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...
Iguana, Inc., manufactures bamboo picture frames that sell for $25 each. Each frame requires 4 linear...
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 direct materials inventory should be 30 percent of next
month’s production.
Expected unit sales (frames) for the upcoming months
follow:
March...
Iguana, Inc., manufactures bamboo picture frames that sell for $25 each. Each frame requires 4 linear...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 $12 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...
Iguana, Inc., manufactures bamboo picture frames that sell for $25 each. Each frame requires 4 linear...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...
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