In: Accounting
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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
$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:
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
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