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In: Accounting

Required information [The following information applies to the questions displayed below.] Iguana, Inc., manufactures bamboo picture...

Required information

[The following information applies to the questions displayed below.]

Iguana, Inc., manufactures bamboo picture frames that sell for $30 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 $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 300
April 300
May 350
June 450
July 425
August 475


Variable manufacturing overhead is incurred at a rate of $0.30 per unit produced. Annual fixed manufacturing overhead is estimated to be $9,600 ($800 per month) for expected production of 4,000 units for the year. Selling and administrative expenses are estimated at $850 per month plus $0.60 per unit sold.


Iguana, Inc., had $12,800 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 $3,500. All other operating costs are paid during the month incurred. Monthly fixed manufacturing overhead includes $200 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).     

April May June 2nd Quarter Total

1.Budgeted Sales Revenue $9,000 $10,500 $13,500 $33,000

2.Budgeted Production in Units 120 140 180 440

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 $8,100 $9,400 $12,150   $29,650

7.Total Budgeted Selling and Administrative Expenses $0.00

Solutions

Expert Solution

APRIL MAY JUNE
1.BUDGETED SALES REVENUE $9000(300 unit*$30) $10500(350 unit*$30) 13500(450 unit*$30)

2.BUDGETED PRODUCTION UNIT

335 units 410 units 415 units
3.BUDGETED COST OF DIRECT MATERIAL PURCHASE $3600 $4200 $5400
4.BUDGETED DIRECT LABOR COST $1650 $1925 $2475
5.BUDGETED MANUFACTURING OVERHEAD $4390 $905

$935

6.BUDGETED COST OF GOOD SOLD $5230 $6065

$7845

7.TOTAL BUDGETED SELLING AND ADMINISTRATIVE EXPENSE $1030 $1060 $1120

1. Budgeted sales revenue = budgeted sales unit * budgeted selling price

2. budgeted production unit =sales-opening inventory+closing inventory

3.budgeted direct material cost =number of material required * material cost per unit

4. budgeted direct labor cost = total labor hour * labor rate per hour

5. budgeted manufacturing overhead = variable overhead + fixed overhead

6. budgeted cost of good sold =opening stock +purchase+direct expense-closing stock

7. total budgeted selling and administrative expense=$0.60*unit sold + 850/month


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