In: Accounting
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 275
April 250
May 300
June 400
July 375
August 425
Variable manufacturing overhead is incurred at a rate of $0.30
per unit produced. Annual fixed manufacturing overhead is estimated
to be $7,200 ($600 per month) for expected production of 4,000
units for the year. Selling and administrative expenses are
estimated at $650 per month plus $0.60 per unit sold. Iguana, Inc.,
had $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 purchases for March 1 totaled $2,000. All
other operating costs are paid during the month incurred. Monthly
fixed manufacturing overhead includes $150 in depreciation. During
April, Iguana plans to pay $3,000 for a piece of
equipment.
Required: Complete Iguana's budgeted income statement for quarter 2. (Round cost per unit in intermediate calculations to 2 decimal places.)