Questions 1-2 (of 2) Save & Exit Submit [The following information applies to th

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Questions 1-2 (of 2) Save & Exit Submit [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 Aprill May 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

Iguana Inc, April May June 2nd quarter total Beginning cash Balance 12800 12840.4 12562 Plus : Budgeted Cash receipts 9000 10350 13200 32550 Less : Budgted Cash Payments 10959.6 8628.4 9482.4 29070.4 Preliminary Cash balance 10840.4 14562 16279.6 Cash Borrowed/Repaid 2000 -2000 0 Ending Cash Balance 12840.4 12562 16279.6 Sales Budget Month Unit Sales Unit sale Price Sales Revenue Ending Finished Inventory in units Cash sales @ 80% of sales Revnue Cash from Customer in the same month Balance Cash from customer in month following the sale Total Cash collected from customer March 300 30 9000 120 7200 900 April 300 30 9000 140 7200 900 900 9000 May 350 30 10500 180 8400 1050 900 10350 June 450 30 13500 170 10800 1350 1050 13200 July 425 30 12750 190 10200 1275 1350 12825 August 475 30 14250 11400 1425 1275 Production Bughet Opening Finished goods Inventory -A Units sold-B Closing Finished goods Inventory-C Units manufactured D=B+C-A Raw Material(Bambo Feet)quantity required D*4 Opening Bamboo feet Inventory Closing Bamboo feet Inventory Bamboo Feet Invnentroy to be purchased cost of per Bamboo feet Total Raw Material Purchase Value Month March 300 120 384 April 120 300 140 320 1280 384 468 1364 3 4092 May 140 350 180 390 1560 468 528 1620 3 4860 June 180 450 170 440 1760 528 534 1766 3 5298 July 170 425 190 445 1780 534 0 August 190 475 0 Raw Material Purchase Value as calculated Cash Payment for raw Material In the same Month Cash payment for Raw Material in the month following purchase Payment of Monthly Fixed Manufacturing expenses Payment of Monthly Variable Manufacturing expenses Payment of Monthly Fixed sellign & administrative expenses Payment of Monthly Variable selling & administrative expenses Payment for Direct Labor Special equipment to be purchased Total cash Payment to be made Month March 3500 2800 600 0 850 180 April 4092 3273.6 700 600 96 850 180 1760 3500 10959.6 May 4860 3888 818.4 600 117 850 210 2145 8628.4 June 5298 4238.4 972 600 132 850 270 2420 9482.4 July 1059.6 600 133.5 850 255 2447.5 August 600 0 850 285

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