guana, Incorporated, manufactures bamboo picture frames that sell for $25 each. Each frame equires 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: • Ending finished goods inventory should be 40 percent of next month's sales. • Ending direct materials inventory should be 30 percent of next month's production. Expected unit sales (frames) for the upcoming months follow: March 275 April 250 May 300 June 400 July August 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. Iguana, Incorporated, had $10,800 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 direct materials purchases, 80 percent is paid for during the month purchased and 20 percent is paid in the following month. Direct materials purchases for March 1 totaled $2,000. All other operating costs are paid during the month incurred. Monthly fixed manufacturing overhead includes $150 in depreciation. During April, Iguana plans to pay $3,000 for a piece of equipment.

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter8: Budgeting For Planning And Control

Section: Chapter Questions

Problem 26E: Ingles Corporation is a manufacturer of tables sold to schools, restaurants, hotels, and other...

Compute the following for Iguana, Incorporated, for the second quarter (April, May, and June).

Note: Do not round your intermediate calculations.

April	May	June	2nd Quarter Total
1. Budgeted Sales Revenue	$6,250selected answer correct	$7,500selected answer correct	$10,000selected answer correct	$23,750
2. Budgeted Production in Units	270selected answer correct	340selected answer correct	390selected answer correct	1,000not attempted
3. Budgeted Cost of Direct Material Purchases	$4,656selected answer incorrect	not attempted	not attempted	$4,656
4. Budgeted Direct Labor Cost	not attempted	not attempted	not attempted	$0
5. Budgeted Manufacturing Overhead	not attempted	not attempted	not attempted	$0
6. Budgeted Cost of Goods Sold	not attempted	not attempted	not attempted	$0
7. Total Budgeted Selling and Administrative Expense