In: Accounting
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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:
Expected unit sales (frames) for the upcoming months
follow:
March | 370 |
April | 440 |
May | 490 |
June | 590 |
July | 565 |
August | 615 |
Variable manufacturing overhead is incurred at a rate of $0.40 per
unit produced. Annual fixed manufacturing overhead is estimated to
be $7,200 ($600 per month) for expected production of 4,500 units
for the year. Selling and administrative expenses are estimated at
$650 per month plus $0.50 per unit sold.
Iguana, Inc., had $11,200 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 $4,500. All other
operating costs are paid during the month incurred. Monthly fixed
manufacturing overhead includes $340 in depreciation. During April,
Iguana plans to pay $3,500 for a piece of equipment.
Required:
Compute the following for Iguana, Inc., for the second quarter
(April, May, and June).
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