The folowing information applies to the questions displeyed below guana, Inc. ta
ID: 2508696 • Letter: T
Question
The folowing information applies to the questions displeyed below guana, Inc. takes approximately 30 minutes to build, and the labor rate averages $14 per hour. iguana has the following inventory policies costs $2.50 per foot. Each frame 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 Verlable manufacturing overhead is inoumed at a rate of $050 per unt produced. Annual foed manufacturing overheed is estimated to be $7.200 ($Go0 monthl for expected production of 3,000 units for the year. Selling and edministrative espenses a are estimated at $650 per month plus $0.50 per unt Inc, had $1,000 cash on hand on Apri t. Of s sales, 80 percent is in cash. Of the credit sales, S0 percent is colected during the morth of the sole 0 r- materas parehases, BO gercere s paid for dring the rom prchased and 20 percent is padn the folowing onn-nsteronnehmes or March 1 totaled $3,000 All other operating costs are paid during the month incumed Monthly fxed manufechuring April, Iguana plans to pary $2.000 for a piece of equpmen and 50 percent is collected durieg the month following the sale. overhead includes $230 in depreciation, During 3.33 points MacBook Air sa8 . 5Explanation / Answer
Solution:
Part 1a- Sales Budget
Sales Budget
April
May
June
Quarter
Expected Unit Sales
330
380
480
1,190
Unit Selling Price
$25
$25
$25
$25
Budgeted Sales in dollars
$8,250
$9,500
$12,000
$29,750
Part 1b – Budgeted Production in Units
Production Budget in units
April
May
June
2nd Quarter Total
July
Next Month's Expected Unit Sales
380
480
455
505
Ratio of inventory to future sales
40%
40%
40%
40%
Budgeted Finished Goods Ending Inventory (units)
152
192
182
202
Add: Budgeted Sales (units)
330
380
480
445
Required units of available production
482
572
662
647
Less: Budgeted Beginning Inventory (Ending Finished Goods Inventory of last month)
132
152
192
178
Units to be produced
350
420
470
1240
469
Part 1c – Budgeted cost of Raw material purchases
Budgeted Cost of Raw materials purchases
April
May
June
2nd Quarter Total
July
Production Budget (units)
350
420
470
469
Materials requirement per unit (linear feet)
4
4
4
4
Materials needed for production (linear feet)
1400
1680
1880
1876
Add: budgeted ending inventory (30% of the next months materials requirements)
504
564
562.8
Total materials requirements (in feet)
1904
2244
2442.8
Less: Beginning Inventory (Ending Inventory of Previous Month)
420
504
564
Materials to be purchased (linear feet)
1484
1740
1878.8
Raw material cost per foot
$2.50
$2.50
$2.50
Budgeted Cost of Raw material purchases
$3,710
$4,350
$4,697
$12,757
Part 1d – Budgeted Direct Labor Cost
Direct Labor Budget
April
May
June
Quarter 2 Total
Budgeted Production Units
350
420
470
Labor Requirement per unit (hours)
0.5
0.5
0.5
Total Direct Labor Hours needed
175
210
235
Direct Labor Cost per hour
$14
$14
$14
Budgeted Direct Labor Cost
$2,450
$2,940
$3,290
$8,680
Answer is the given format as follows:
April
May
June
Quarter 2 Total
1) Budgeted Sales Revenue
$8,250
$9,500
$12,000
$29,750
2) Budgeted Production in Units
350
420
470
1240
3) Budgeted Cost of Raw material purchases
$3,710
$4,350
$4,697
$12,757
4) Budgeted Direct Labor cost
$2,450
$2,940
$3,290
$8,680
Hope the above calculations, working and explanations are clear to you and help you in understanding the concept of question.... please rate my answer...in case any doubt, post a comment and I will try to resolve the doubt ASAP…thank you
Pls ask separate question for remaining parts.
Sales Budget
April
May
June
Quarter
Expected Unit Sales
330
380
480
1,190
Unit Selling Price
$25
$25
$25
$25
Budgeted Sales in dollars
$8,250
$9,500
$12,000
$29,750
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