Question

Iguana, Inc., manufactures bamboo picture frames that sell for $20 each. Each frame requires 4 linear feet of bamboo, which costs $2.00 per foot. Each frame takes approximately 30 minutes to build, and the labor rate averages $13 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 365 April 430 May 480 June 580 July 555 August 605 Variable manufacturing overhead is incurred at a rate of $0.30 per unit produced. Annual fixed manufacturing overhead is estimated to be $4,800 ($400 per month) for expected production of 4,000 units for the year. Selling and administrative expenses are estimated at $450 per month plus $0.50 per unit sold. Iguana, Inc., had $11,000 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 $3,400. All other operating costs are paid during the month incurred. Monthly fixed manufacturing overhead includes $330 in depreciation. During April, Iguana plans to pay $2,000 for a piece of equipment. 1. Compute the following for Iguana, Inc., for the second quarter (April, May, and June). Budgeted Sales Revenue- Budgeted Production in Units-Budgeted Cost of Raw Materials-Budgeted direct Labor cost- budgeted manufactued overhead- budgeted cost of goods sold And budgeted selling and admin expenses

Answer 1

Answer a
Sales Budget
	April	May	June	Total
Sales in Units	430	480	580	1,490
Sp Per Unit	20	20	20	20
Total Sales in $	8,600	9,600	11,600	29,800
Frame Production Budget
	April	May	June	Total
Sales In units	430	480	580	1,490
Add: Closing Inventory in units	192	232	222	222
Total Needs	622	712	802	1,712
Less: opening Inventory in uints	(172)	(192)	(232)	(172)
Required Production in Units	450	520	570	1,540
Raw Material Purchase Budget
	April	May	June	Total
Required Production in Units	450	520	570	1,540
Bamboo required per Unit in Feet	4	4	4	4
Total Bamboo required for Production	1,800	2,080	2,280	6,160
Add: Closing Raw Material Inventory	624	684	690	690
Total Needs	2,424	2,764	2,970	6,850
Less: opening Inventory in feets	(540)	(624)	(684)	(540)
Raw Material Purchased in feets	1,884	2,140	2,286	6,310
Cost of raw Material per feet	2.00	2.00	2.00	2.00
Cost of raw Material Purchased	3,768	4,280	4,572	12,620
Budgeted Direct Labor Costs
	April	May	June	Total
Required Production in Units	450	520	570	1,540
Lab. Hour required per unit	0.50	0.50	0.50	0.50
Total Labor Hours Required	225	260	285	770
Lab. Rate per Hour	13	13	13	13
Budgeted Direct Labor Costs	2,925	3,380	3,705	10,010
Budgeted Manufacturing Overhead
	April	May	June	Total
Required Production in Units	450	520	570	1,540
Variable MOH per Unit	0.30	0.30	0.30	0.30
Total Variable MOH	135	156	171	462
Fixed MOH
Depreciation	330	330	330	990
Other MOH	70	70	70	210
Total Fixed MOH	400	400	400	1,200
Total MOH	535	556	571	1,662
Budgeted Manufacturing Costs per Unit:
Direct Materials - 4 Ft. X $2	8.00
Direct Labor - 0.50 Hrs X $13	6.50
Variable MOH	0.30
Fixed MOH - $4,800 / 4000 Units	1.20
Total Budgted Manufacturing Cost per Unit	16.00
Budgeted Cost of Goods Sold
	April	May	June	Total
No. Of Units Sold	430	480	580	1,490
Total Budgted Manufacturing Cost per Unit	16	16	16	16
Budgeted Cost of Goods Sold	6,880	7,680	9,280	23,840
Total Budgetd Selling & Admn. Expenses
	April	May	June	Total
No. Of Units Sold	430	480	580	1,490
Variable Selling & Admn. Exp. Per Unit	0.50	0.50	0.50	0.50
Total Variable selling & Admn. Exp.	215	240	290	745
Fixed selling & Admn. Exp.	450	450	450	1,350
Total selling & Admn. Exp.	665	690	740	2,095