FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
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Iguana, Inc., manufactures bamboo picture frames that sell for $20 each. Each frame requires 4 linear feet of bamboo, which costs $1.50 per foot. Each frame takes approximately 30 minutes to build, and the labor rate
averages $13 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:
March
April
May
June
July
August
325
350
400
500
475
525
Variable manufacturing overhead is incurred at a rate of $0.30 per unit produced. Annual fixed manufacturing overhead is estimated to be $6,000 ($500 per month) for expected production of 5,000 units for the year.
Selling and administrative expenses are estimated at $550 per month plus $0.60 per unit sold.
Iguana, Inc., had $12,000 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 $2,000. All other operating costs are paid
during the month incurred. Monthly fixed manufacturing overhead includes $250 in depreciation. During April, Iguana plans to pay $4,000 for a piece of equipment.](https://content.bartleby.com/qna-images/question/0d4082ee-1b28-46be-9eb2-4ac4c1718617/2af501dd-6056-4fa7-95ab-411c179f7d55/ywzc6vy_processed.png)
Transcribed Image Text:[The following information applies to the questions displayed below.]
Iguana, Inc., manufactures bamboo picture frames that sell for $20 each. Each frame requires 4 linear feet of bamboo, which costs $1.50 per foot. Each frame takes approximately 30 minutes to build, and the labor rate
averages $13 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:
March
April
May
June
July
August
325
350
400
500
475
525
Variable manufacturing overhead is incurred at a rate of $0.30 per unit produced. Annual fixed manufacturing overhead is estimated to be $6,000 ($500 per month) for expected production of 5,000 units for the year.
Selling and administrative expenses are estimated at $550 per month plus $0.60 per unit sold.
Iguana, Inc., had $12,000 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 $2,000. All other operating costs are paid
during the month incurred. Monthly fixed manufacturing overhead includes $250 in depreciation. During April, Iguana plans to pay $4,000 for a piece of equipment.
Transcribed Image Text:Required:
1. Compute the budgeted cash receipts for Iguana. (Do not round your intermediate calculations. Round final answers to 2 decimal places.)
Budgeted Cash Receipts
Budgeted Cash Payments
April
April
2. Compute the budgeted cash payments for Iguana. (Do not round your intermediate calculations. Round final answers to 2 decimal places.)
2nd Quarter Total
$
0.00
Beginning Cash Balance
Plus: Budgeted Cash Receipts
Less: Budgeted Cash Payments
Preliminary Cash Balance
Cash Borrowed / Repaid
Ending Cash Balance
May
April
May
June
3. Prepare the cash budget for Iguana. Assume the company can borrow in increments of $1,000 to maintain a $10,000 minimum cash balance. (Leave no cell blank enter "0" wherever required. Round your
answers to 2 decimal places.)
May
2nd Quarter Total
$
0.00
June
June
2nd Quarter Total
0.00
0.00
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