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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 $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	280
April	260
May	310
June	410
July	385
August	435

Variable manufacturing overhead is incurred at a rate of $0.40 per unit produced. Annual fixed manufacturing overhead is estimated to be $7,800 ($650 per month) for expected production of 3,000 units for the year. Selling and administrative expenses are estimated at $700 per month plus $0.50 per unit sold.

Iguana, Inc., had $10,900 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 $2,500. All other operating costs are paid during the month incurred. Monthly fixed manufacturing overhead includes $160 in depreciation. During April, Iguana plans to pay $3,100 for a piece of equipment.

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

	April May June 2nd Quarter Total 1. Budgeted Sales Revenue $7,800 $9,300 $12,300 $29,400 2. Budgeted Production in Units 0 3. Budgeted Cost of Direct Material Purchases $0 4. Budgeted Direct Labor Cost $0 5. Budgeted Manufacturing Overhead $0 6. Budgeted Cost of Goods Sold $0 7. Total Budgeted Selling and Administrative Expenses $0.00

Answer 1

Solution 1:
Sales Budget - Iguana Inc.
Particulars	April	May	June	2nd Quarter Total
Sales units	260	310	410	980
Selling price per unit	$30.00	$30.00	$30.00	$30.00
Budgeted Sales Revenue	$7,800.00	$9,300.00	$12,300.00	$29,400.00
Solution 2:
Production Budget - Iguana Inc.
Particulars	April	May	June	2nd Quarter Total	July
Sales units	260	310	410	980	385
Add: Desired ending inventory (40% of next month sales)	124	164	154	154	174
Less: Opening Inventory	104	124	164	104	154
Budgeted production units	280	350	400	1030	405
Solution 3:
Material Purchase Budget - Iguana Inc.
Particulars	April	May	June	2nd Quarter Total
Unit to Produce	280	350	400	1030
Material needed per unit (In foot)	4	4	4	4
Material needed for unit to produce	1120	1400	1600	4120
Add: Desired units of material in ending inventory (30% of next month production)	420	480	486	486
Less: units of material in beginning inventory	336	420	480	336
Units of material to purchase	1204	1460	1606	4270
Cost per feet	$2.50	$2.50	$2.50	$2.50
Budgeted cost of raw material purchases	$3,010.00	$3,650.00	$4,015.00	$10,675.00
Solution 4:
Budgeted direct labor cost - Iguana Inc.
Particulars	April	May	June	2nd Quarter Total
Unit to Produce	280	350	400	1030
Direct labor required per unit (in hrs)	0.5	0.5	0.5	0.5
Required direct labor hours	140	175	200	515
Labor rate	$12.00	$12.00	$12.00	$12.00
Budgeted direct labor cost	$1,680.00	$2,100.00	$2,400.00	$6,180.00
Solution 5:
Budgeted Manufacturing Overhead - Iguana Inc.
Particulars	April	May	June	2nd Quarter Total
Unit to Produce	280	350	400	1030
Variable overhead cost per unit	$0.40	$0.40	$0.40	$0.40
Total variable overhead cost	$112.00	$140.00	$160.00	$412.00
Fixed overhead	$650.00	$650.00	$650.00	$1,950.00
Budgeted manufacturing overhead	$762.00	$790.00	$810.00	$2,362.00
Solution 6:
Compuatation of Unit Product Cost - Iguana Inc.
Particulars	Per Unit Cost
Direct Material (4*$2.50)	$10.00
Direct labor (0.5 * $12)	$6.00
Variable manufacturing overhead	$0.40
Fixed manufacturing overhead	$2.60
Unit Product Cost	$19.00
Budgeted Cost of goods sold - Iguana Inc.
Particulars	April	May	June	2nd Quarter Total
Estimated Unit sales	260	310	410	980
Unit cost	$19.00	$19.00	$19.00	$19.00
Budgeted Cost of goods Sold	$4,940.00	$5,890.00	$7,790.00	$18,620.00
Solution 7:
Budgeted Selling and administrative expenses - Iguana Inc.
Particulars	April	May	June	2nd Quarter Total
Estimated Unit sales	260	310	410	980
Variable selling expenses per unit	$0.50	$0.50	$0.50	$0.50
Total variable selling expenses	$130.00	$155.00	$205.00	$490.00
Fixed selling and administrative expenses	$700.00	$700.00	$700.00	$2,100.00
Total selling and administrative expenses	$830.00	$855.00	$905.00	$2,590.00