Academic Integrity: tutoring, explanations, and feedback — we don’t complete graded work or submit on a student’s behalf.

SB Problem PA8-1 to PA8-3 The following information applies to the questions dis

ID: 2565166 • Letter: S

Question

SB Problem PA8-1 to PA8-3 The following information applies to the questions displayed below. Iguana, Inc., manufactures bamboo picture frames that sell for $30 each. Each frame requires 4 linear feet of bamboo, which costs $3.00 per foot. Each frame takes approximately 30 minutes to build, and the labor rate averages $11 per hour. Iguana has the following inventory policies: 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 300 300 350 450 425 475 March agwril June July August Variable manufacturing overhead is incurred at a rate of $0.30 per unit produced. Annual fixed manufacturing overhead is estimated to be $9,600 ($800 per month) for expected production of 4,000 units for the year. Selling and administrative expenses are estimated at $850 per month plus $0.60 per unit sold Iguana, Inc., had $12,800 cash on hand on April 1. Of its sales, 80 percent is in cash. Of the credit sales, 50 percent is collected during the month of the sale, and 50 percent is collected during the month following the sale. Of raw materials purchases, 80 percent is paid for during the month purchased and 20 percent is paid in the following month. Raw materials purchases for March 1 totaled $3,500. All other operating costs are paid during the month incurred. Monthly fixed manufacturing overhead includes $200 in depreciation. During April, Iguana plans to pay $3,500 for a piece of equipment.

Explanation / Answer

ANSWER 1

Particulars

April

May

June

Total

Budgeted sales revenue

$9,000

$10,500

$13,500

$33,000

Budgeted unit produced

320

390

440

1,150

Budgeted cost of material purchase

$4,164

$4,860

$5,298

$14,322

Budgeted labor cost

$1,760

$2,145

$2,420

$6,325

Total budgeted manufacturing overhead

$896

$917

$932

$2,745

Budgeted cost of goods sold

$6,496

$7,742

$8,632

$22,870

Total selling and administration expenses

$1,030

$1,060

$1,120

$3,210

Working notes

Particulars

April

May

June

July

Budgeted sales unit

300

350

450

425

Selling price per unit

30

30

30

30

Budgeted sales revenue

$9,000

$10,500

$13,500

$12,750

Sales (unit)

300

350

450

425

Ending inventory (add)

140

180

170

190

Beginning inventory (less)

-120

-140

-180

-170

Budgeted unit produced

320

390

440

445

Raw material required (budgeted production units* 4) (in foot)

1280

1560

1760

Ending raw material (add)

468

528

534

Beginning raw material (less)

-360

-468

-528

Budgeted raw material purchase ( in feet)

1388

1620

1766

Cost of raw material per feet

3

3

3

Budgeted cost of material purchase

$4,164

$4,860

$5,298

Budgeted unit produced

320

390

440

Times required for production ( in hours )

160

195

220

Labor cost per hour

11

11

11

Budgeted labor cost

$1,760

$2,145

$2,420

Budgeted unit produced

320

390

440

445

Variable manufacturing overhead per unit

0.30

0.30

0.30

Variable manufacturing overhead

96

117

132

Fixed manufacturing overhead

800

800

800

Total budgeted manufacturing overhead

$896

$917

$932

Budgeted unit sold

300

350

450

Variable selling and administration per unit

0.60

0.60

0.60

Variable selling and administration

180

210

270

Fixed selling and administration

850

850

850

Total selling and administration expenses

$1,030

$1,060

$1,120

Raw material required (budgeted production units* 4) (in foot)

1,280

1,560

1,760

Raw material per feet ($)

$3

$3

$3

Cost of raw material consumed

$3,840

$4,680

$5,280

Budgeted labor cost

$1,760

$2,145

$2,420

Total budgeted manufacturing overhead

$896

$917

$932

Budgeted cost of goods sold

$6,496

$7,742

$8,632

ANSWER 2

Budgeted income statements

For the quarter ending June

Budgeted income statements for the quarter ending June

April

May

June

Total

Budgeted sales revenue

$9,000

$10,500

$13,500

$33,000

Cost of raw material consumed

$3,840

$4,680

$5,280

$13,800

Budgeted labor cost

$1,760

$2,145

$2,420

$6,325

Total budgeted manufacturing overhead

$896

$917

$932

$2,745

Budgeted gross margin

$2,504

$2,758

$4,868

$10,130

Total selling and administration expenses

$1,030

$1,060

$1,120

$3,210

Budgeted net operating profit

$1,474

$1,698

$3,748

$6,920

ANSWER 3

Budgeted cash receipts

Particulars

March

April

May

June

July

Budgeted sales unit

300

300

350

450

425

Selling price per unit

30

30

30

30

30

Budgeted sales revenue

9000

9000

10500

13500

12750

Cash sales (80%)

7200

7200

8400

10800

10200

Credit sales (20%)

1800

1800

2100

2700

2550

Budgeted cash receipts

Particulars

April

May

June

Total

Cash received from cash sales

7200

8400

10800

26400

Cash received from credit sales during months (50% of credit sales)

900

1050

1350

3300

Cash received from cash sales during following months

900

900

1050

2850

Budgeted cash receipts

$9,000

$10,350

$13,200

$32,550

Budgeted cash payments

Particulars

March

April

May

June

Total

Budgeted cost of material purchase

$4,164

$4,164

$4,860

$5,298

Cash paid during the months (80%)

$3,331.20

$3,888.00

$4,238.40

$11,457.60

Cash paid during following month (20 %)

$832.80

$832.80

$972.00

$2,637.60

Budgeted cash payments for raw material suppliers

$4,164.00

$4,720.80

$5,210.40

$14,095.20

Budgeted labor cost

$1,760

$2,145

$2,420

$6,325.00

Total budgeted manufacturing overhead

$696

$717

$732

$2,145.00

Total selling and administration expenses

$1,030

$1,060

$1,120

$3,210.00

Payment for plant equipments

$3,500

$0

$0

$3,500.00

Budgeted cash payments

$11,150.00

$8,642.80

$9,482.40

$29,275.20

Cash budget

Particulars

April

May

June

Total

Beginning cash balance

12,800.00

12,650.00

12,357.20

12,800.00

Plus budgeted cash receipts

9,000.00

10,350.00

13,200.00

32,550.00

Less budgeted cash payments

-11,150.00

-8,642.80

-9,482.40

-29,275.20

Preliminary cash balance

10,650.00

14,357.20

16,074.80

16,074.80

Cash borrowed (add)

2,000.00

2,000.00

Cash repaid (less)

-2,000.00

-2,000.00

Ending cash balance

$12,650.00

$12,357.20

$16,074.80

16,074.80

Particulars

April

May

June

Total

Budgeted sales revenue

$9,000

$10,500

$13,500

$33,000

Budgeted unit produced

320

390

440

1,150

Budgeted cost of material purchase

$4,164

$4,860

$5,298

$14,322

Budgeted labor cost

$1,760

$2,145

$2,420

$6,325

Total budgeted manufacturing overhead

$896

$917

$932

$2,745

Budgeted cost of goods sold

$6,496

$7,742

$8,632

$22,870

Total selling and administration expenses

$1,030

$1,060

$1,120

$3,210