PA8-1 Preparing Operating Budgets Iguana, Inc., manufactures bamboo picture fram
ID: 2561267 • Letter: P
Question
PA8-1 Preparing Operating Budgets Iguana, Inc., manufactures bamboo picture frames that sell for $25 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 $12.00 per hour. Iguana has the following inventory policies: a, b, f, g 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 April May June July August 275 250 300 400 375 425 Variable manufacturing overhead is incurred at a rate of $0.30 per unit produced. Annual fixed manufacturing overhead is estimated to be $7,200 ($600 per month) for expected production of 4,000 units for the year. Selling and administrative expenses are estimated at $650 per month plus $0.60 per unit sold.Explanation / Answer
IGUANA, INC.
Budgeted Income StatementFor
the Quarter Ending June
Budgeted sales revenue
April - 250*25 -. 6250
May - 300*25 - 7500
June - 400* 25 - 10000
Total sales revenue for 2nd quarter - 23500
Budgeted Manufacturing Costs Per Unit
Direct Materials (4 ft × $2.00 perft)$8.00
DirectLabor (.5 Hours × $12 perHour)6.00
Variable Manufacturing Overhead0.30
FixedManufacturing Overhead (7200/4000) 1.80
budgeted cost per unit - 16.10
April - 250*16.10 - 4025
may - 300*16.10 - 4830
april- 400*16.10 - 6440
total budgeted cost for 2nd quarter - 15295
Total budgeted selling and administrative expnese= budgeted selling and administrative expnese + budgeted fixed selling and administrative expnese
April - (250*0.60)+650 =800
May - (300*0.60)+650 =830
June - (400*0.60)+650 = 890
Total budgeted selling and administrative expense for 2nd quarter = 2520
April may june 2nd quarter total Budgeted sales revenue 6250 7500 10000 23500 Budgeted cost of goods sold 4025 4830 6440 15295 Budgeted gross margin 2225 2670 3560 8455 Budgeted selling and administrative expnese 800 830 899 2520 Budgeted net operating income 1425 1840 2670 5935Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.