Question

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:

Ending finished goods inventory should be 40 percent of next month’s sales.

Ending raw materials inventory should be 30 percent of next month’s production.

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 raw materials purchases, 80 percent is paid for during the month purchased and 20 percent is paid in the following month. Raw 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. 1. Compute the following for Iguana, Inc., for the second quarter (April, May, and June). April May June 2nd Quarter Total 1. Budgeted Sales Revenue 2. Budgeted Production in Units 3. Budgeted Cost of Raw Material Purchases 4. Budgeted Direct Labor Cost 5. Budgeted Manufacturing Overhead 6. Budgeted Cost of Goods Sold. 7. Total Budgeted Selling and Adm. Expenses

2. Complete Iguana's budgeted income statement for quarter 2. (Round cost per unit in intermediate calculations and final answers to 2 decimal places.)

IGUANA, INC.
Budgeted Income Statement
For the Quarter Ending June
	April	May	June	2nd Quarter Total
Budgeted Gross Margin
Budgeted Net Operating Income

3. 1. Compute the budgeted cash receipts for Iguana. (Do not round your intermediate calculations. Round final answers to 2 decimal places.)

	April May June 2nd Quarter Total Budgeted Cash Receipts

2. Compute the budgeted cash payments for Iguana. (Do not round your intermediate calculations. Round final answers to 2 decimal places.)

	April May June 2nd Quarter Total Budgeted Cash Payments

3. Prepare the cash budget for Iguana. Assume the company can borrow in increments of $1,000 to maintain a $10,000 minimum cash balance. (Leave no cell blank enter "0" wherever required. Round your answers to 2 decimal places.)

	April May June 2nd Quarter Total Beginning Cash Balance Plus: Budgeted Cash Receipts Less: Budgeted Cash Payments Preliminary Cash Balance Cash Borrowed / Repaid Ending Cash Balance

Answer 1

1)

		March	April	May	June	July
Budgeted sales revenue(Units)	A		440 units	490 units	590 units	565 units
Selling price	B
			25.00	25.00	25.00
Revenue(A*B)			11,000.00	12,250.00	14750
1 Frame requires Bamboo			4.00	4.00	4
Raw Material bamboo			1,760.00	1,960.00	2,360.00	2,260.00
Cost per foot			2.50	2.50	2.50
Time taken by each frame			.5 hours	.5 hours	.5 hours
Total time taken			220 hours	245 hours	295 hours
labour per hour			14.00	14.00	14.00
Variable manufacturirng overhead			0.40	0.40	0.40
Ending raw material inventory			588.00	708.00	678.00
Ending finished goods inventory		176	196.00	236.00	226
Budgeted units produced			460.00	530.00	580.00
Budgeted cost of raw material			4,400.00	4,900.00	5900
Budgeted direct labour cost			3080	3430	4130
Budgeted manufactuting ovrhead			184.00	212	232
Budgeted cost of goods sold			105.60	117.60	141.60
Budgetd selling and administrative			870.00	895.00	945.00

		March	April	May	June	July
Budgeted sales revenue(Units)	A		440 units	490 units	590 units	565 units
Selling price	B
			25.00	25.00	25.00
Revenue(A*B)			11,000.00	12,250.00	14,750.00
Budgeted cost of raw material			4,400.00	4,900.00	5,900.00
Budgeted direct labour cost			3,080.00	3,430.00	4,130.00
Budgeted manufactuting ovrhead			184.00	212.00	232.00
Budgeted cost of goods sold			105.60	117.60	141.60
Budgetd selling and administrative			870.00	895.00	945.00
Total Costs			8,639.60	9,554.60	11,348.60
Operating income			2,360.00	2,695.00	3,401.00

3)

	March	April	May	June
Cash Balance		11,200.00	21,100.00	32,975.00
Cash Sales (80) units		352.00	392.00	472.00
Credit sales(20) units		88.00	98.00	118.00
Unit price		25.00	25.00	25.00
Total collection
cash sales		8,800.00	9,550.00	11,800.00
credit sales		1,100.00	2,325.00	2,700.00
A		21,100.00	32,975.00	47,475.00
Cash payments
Raw Material Purchase	4500	900.00
Equipment		3,500.00
Labour		3,080.00	3,430.00	4,130.00
Manufacturing overhead		184.00	212.00	232.00
Selling and administrative		870.00	895.00	945.00
Fixed expenses		260.00	260.00	260.00
B		8,794.00	4,797.00	5,567.00
A-B		12,306.00	28,178.00	41,908.00