Could you do the q2 and 3, based on the information in the first photo, be sure
ID: 2512772 • Letter: C
Question
Could you do the q2 and 3, based on the information in the first photo, be sure to take the 3300 dollar purchase of equipment in April that the company will do.The following information applies to the questions displayed below lquana, Inc, manufactures bamboo picture frames thet selfor $25 eech Each frame requires 4 linear feet of bamboo, which costs $2.00 per foot Each frame takes approximetely 30 minutes to buld, and the labor rate everages $11 per hour. lguane has the following inventory policles: Ending rew materials inventory should be 30 percent of next month's production Expected unit seles (frames) for the upcoming months follow overhead is incured at a sate of so60 per unit produced.Annual fhwed manufacturing overhead is estimated to be $7200 (5600 per monthl for expected production of 3.000 units for the year Selling and expenses are estimated at $700 per month plus $0.50 per unit sold is collected during the month of the sale, and 50 percent is collected during the month following the the month purchased and 20 percent is paid in the ollowing month Rew materials purchases for Manch 1 botaled $2,000 All other operating costs are ped guans, Inc, ,had $100 cash on hand on Apri Of is sales, 80 pencent is in cash Of the credit sales, 50 percent during the month i Incurned. Monthly fixsed manudactuting overhead includes $180 in deprecietion Duning Apri, Iguena plans to pay $3,300 for a piece of equipment 33.33 points MacBook Air 2 6 9 2 4
Explanation / Answer
Solution:
Part 2 --- Budgeted Cash Payments
Budgeted Cash Payments
April
May
June
2nd Quarter Total
Budgeted Cash Payment for Materials Purchases (Refer Note 1)
$2,454.40
$2,977.60
$3,313.60
$8,745.60
Cash Payment for Labor (Refer Note 2)
$1,650.00
$2,035.00
$2,310.00
$5,995.00
Payment for Variable Manufacturing Overhead (Refer note 3)
$180.00
$222.00
$252.00
$654.00
Fixed Manufacturing Overhead (excluding depreciation since depreciation is a non cash item and does not involve any cash outflow) ($600 - 180))
$420.00
$420.00
$420.00
$1,260.00
Selling and Administrative Expense (Refer Note 4)
$850.00
$885.00
$910.00
$2,645.00
Payment for Equipment
$3,300.00
$3,300.00
Total Budgeted Cash Payments
$8,854.40
$6,539.60
$7,205.60
$22,599.60
Note 1 –
Working for Budgeted Cash Payment for Merchandise Purchase
April
May
June
July
Next Month's Sales Unit
330
430
405
455
Desired Ending Inventory Ratio
40%
40%
40%
40%
Desired Ending Inventory
132
172
162
182
Plus: Budgeted Sales Unit
280
330
430
405
Total Needs
412
502
592
587
Less: Beginning Finished Goods Inventory (ending inventory of last month)
112
132
172
162
Budgeted Production in Units
300
370
420
425
Required Raw material per unit (linear feet)
4
4
4
4
Total Required Raw Material for Production (pounds)
1200
1480
1680
1700
Add: Desired Ending Raw Material Inventory (30% of next month's production need)
444
504
510
Less: Estimated Beginning Raw material inventory (ending inventory of last month)
360
444
504
Total Budgeted Purchases Raw Material (linear feet)
1284
1540
1686
Cost per foot
$2.00
$2.00
$2.00
Budgeted Cost of Raw materials purchases
$2,568
$3,080
$3,372
Cash Payment Schedule for Merchandise Purchases:
April
May
June
2nd Quarter Total
March Purchases ($2,000*20%)
$400.00
April Purchases
$2,054.40
$513.60
May Purchases
$2,464.00
$616.00
June Purchases
$2,697.60
Total Cash Payment for Purchases
$2,454.40
$2,977.60
$3,313.60
$8,745.60
Note 2 –
Budgeted Direct Labor Cost
April
May
June
2nd Quarter Total
Budgeted Production Units (Frames) (Refer Note 1)
300
370
420
Required Labor Hour per frame
0.50
0.50
0.50
Total Required Labor Hours
150.00
185.00
210.00
Labor Rate per hour
$11.00
$11.00
$11.00
Labor Cost Budget
$1,650.00
$2,035.00
$2,310.00
$5,995.00
Note 3
Variable Manufacturing Overhead
April
May
June
2nd Quarter Total
Budgeted Production Units (Frames) (Refer Note 1)
300
370
420
Variable Manufacturing Expense per unit produced
$0.60
$0.60
$0.60
Total Budgeted Variable Manufacturing Overhead
180.00
222.00
252.00
654.00
Note 4
Selling and Administrative Expenses
April
May
June
2nd Quarter Total
Units Sold
300
370
420
Variable Selling & Admin Expenses per unit sold
$0.50
$0.50
$0.50
Total Variable S&A Expense
$150
$185
$210
Add: Fixed S&A Exp
$700
$700
$700
Total S&A Exp
$850
$885
$910
$2,645
Part 3 – Cash Budget
Cash Budget
April
May
June
2nd Quarter Total
Beginning Cash Balance
$11,100.00
$10,270.60
$10,856.00
$11,100.00
Plus: Budgeted Cash Receipt (Refer Note 5)
$7,025.00
$8,125.00
$10,500.00
$25,650.00
Less: Budgeted Cash Payments (Refer Part 2)
$8,854.40
$6,539.60
$7,205.60
$22,599.60
Preliminary Cash Balance
$9,270.60
$11,856.00
$14,150.40
$14,150.40
Cash Borrowed / Repaid
$1,000.00
-$1,000.00
$0.00
$0.00
Ending Cash Balance
$10,270.60
$10,856.00
$14,150.40
$14,150.40
Note 5 –
Budgeted Cash Receipts
April
May
June
2nd Quarter total
Budgeted Sales in Units
280
330
430
Unit Selling Price
$25
$25
$25
Budgeted Sales in dollars
$7,000
$8,250
$10,750
Cash Sales (Total Sales x 80%) (A)
$5,600
$6,600
$8,600
Credit Sales (Total Sales x 20%)
$1,400
$1,650
$2,150
Schedule of Collection from Sales:
Cash Sales (Total Sales x 80%)
$5,600
$6,600
$8,600
March Credit Sales (290 units x $25*20%*50%) Collected in April
$725.00
April Credit Sales
$700.00
$700.00
May Credit Sales
$825.00
$825.00
June Credit Sale
$1,075.00
Budgeted Cash Receipts
$7,025.00
$8,125.00
$10,500.00
$25,650.00
Budgeted Cash Payments
April
May
June
2nd Quarter Total
Budgeted Cash Payment for Materials Purchases (Refer Note 1)
$2,454.40
$2,977.60
$3,313.60
$8,745.60
Cash Payment for Labor (Refer Note 2)
$1,650.00
$2,035.00
$2,310.00
$5,995.00
Payment for Variable Manufacturing Overhead (Refer note 3)
$180.00
$222.00
$252.00
$654.00
Fixed Manufacturing Overhead (excluding depreciation since depreciation is a non cash item and does not involve any cash outflow) ($600 - 180))
$420.00
$420.00
$420.00
$1,260.00
Selling and Administrative Expense (Refer Note 4)
$850.00
$885.00
$910.00
$2,645.00
Payment for Equipment
$3,300.00
$3,300.00
Total Budgeted Cash Payments
$8,854.40
$6,539.60
$7,205.60
$22,599.60
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