iguans, Inc, manufactures bamboo picture frames that sell for $25 each Each fram

Question

iguans, Inc, manufactures bamboo picture frames that sell for $25 each Each frame requires 4 lnear feet of bemboo, which cons $3.00 per foot Each frame tokes rate averages $12 per hout lguana has the following inventory policies 30 minutes to build, and the labor * Endng frished goods irventory should be 4pe!cent or next month's sales. . Ending raw materials ienventory shouid be 30 percent of next month's production 190 May June August Variable manufacturing overhead is incurred at a rate of $0.20 per unit produced. Annual fixed yeer Selling and administrative expenses are estmated at $650 per month phus S0.50 per unn sold overhead is estimated to be $1.20($600 per month for expected producton of 4,000 units for the guana, Inc, had $10,500 cash on hand on Aprit Of ihs saies, 80 percent is in cash. Of the credit sales, 50 percent is colected during the month of the sale, and 50 percent is collected during the month Of raw materials puchases, 80 percent is paid for during the month purchased and 20 percent is paid in the felowing month. Raw materials purchases for March 1 sotaled $2.000. All other operasing costs ane peid during the month incurred. Monthly fxed manufacturing overhead includes $240 is depreciation. Duiring Apeil, Iouana plans to pay $2.000 for a piece of equipment 121.00 points Required Compute the following for Iguana, Inc, for the second quarter (Apei, May, and June). April 2. Budgeted Production in Unbs . Budgeted Cost of Raw Material Purchases Direct Labor Cost 6. Budgeted Cost of Goods Sold T Total Budgeted Selling and Adm. Expenses

Explanation / Answer

Solution:

Part 1 --- Budgeted Sales Revenue

Sales Budget

April

May

June

2nd Quarter Total

Budgeted Sales (Units)

340

390

490

1,220

Unit Selling Price

$25

$25

$25

$25

Budgeted Sales Revenue in dollars

$8,500

$9,750

$12,250

$30,500

Part 2 – Budgeted Production in Units

Production Budget

April

May

June

2nd Quarter Total

July

Next Month's Expected Unit Sales

390

490

465

515

Ratio of inventory to future sales

40%

40%

40%

40%

Budgeted Finished Goods Ending Inventory (units)

156

196

186

206

Add: Budgeted Sales (units)

340

390

490

465

Required units of available production

496

586

676

671

Less: Budgeted Beginning Inventory (Ending Finished Goods Inventory of last month)

136

156

196

186

Units to be produced

360

430

480

1,270

485

Part 3 – Budgeted Cost of Raw Materials Purchases

Raw Materials Budget

April

May

June

2nd Quarter Total

July

Production Budget (units)

360

430

480

485

Bamboo requirements per unit (in linear feet)

4

4

4

4

Total raw materials needed for production (in linear feet)

1440

1720

1920

1940

Add: Raw materials ending inventory (30% of the next months materials requirements)

516

576

582

Total materials requirements (in feet)

1956

2296

2502

Less: Raw Materials Beginning Inventory (Ending Inventory of Previous Month)

432

516

576

Total Raw materials to be purchased (in linear feet)

1524

1780

1926

5230

Raw material cost per foot

$3.00

$3.00

$3.00

$3.00

Budgeted Cost of Raw material purchases

$4,572

$5,340

$5,778

$15,690

Part 4 – Budgeted Direct Labor Cost

Direct Labor Budget

April

May

June

2nd Quarter Total

Units to be produced

360

430

480

Required Direct Labor Hour per unit

0.50

0.50

0.50

Total Direct Labor Hours Required

180

215

240

Direct Labor Cost per hour

$12

$12

$12

Budgeted Direct Labor Cost

$2,160

$2,580

$2,880

$7,620

You need to fill the above detail in the given answer format as follows:

April

May

June

2nd Quarter Total

1. Budgeted Sales Revenue

$8,500

$9,750

$12,250

$30,500

2. Budgeted Production in Units

360

430

480

1,270

3. Budgeted Cost of Raw Materials Purchases

$4,572

$5,340

$5,778

$15,690

4. Budgeted Direct Labor Cost

$2,160

$2,580

$2,880

$7,620

Please ask separate question for remaining parts.

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Sales Budget

April

May

June

2nd Quarter Total

Budgeted Sales (Units)

340

390

490

1,220

Unit Selling Price

$25

$25

$25

$25

Budgeted Sales Revenue in dollars

$8,500

$9,750

$12,250

$30,500

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