Complete The Budgeted Income Statement: Luguana, Inc., manufactures bamboo pictu

Question

Complete The Budgeted Income Statement:

Luguana, Inc., manufactures bamboo pictures frames that sell for $22 each. Each frame requires 3 linear feet of bamboo, which costs $1.50 per foot. Each frame takes approximately 36 minutes to build, and the labor rate averages $9.00 per hour. Luguana has the following inventory policies: Ending finished goods inventory should be 30 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: Variable manufacturing overhead is incurred at a rate of $.30 per unit produced. Annual fixed manufacturing overhead is estimated to be $6,900 ($575 per month) for expected production of 4,036 units for the year. Selling and administrative expenses are estimated at $670 per month plus $.50 per unit sold. Required: Complete luguana's budgeted income statement for quarter 2. (Round cost per unit and final answers to 2 decimal places.)

Explanation / Answer

Solution.

Calculation of number of units produced:

114

(380*30%)

Calculation of Cost of goods sold:

April May June Sales (units) 250 310 410 - Opening Stock (units) 75
(250*30%) 93
(310*30%) 123
(410*30%) + Closing Stock (units) 93 123

114

(380*30%)

Units produced during the month 268 340 401

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