Required information [The following information applies to the questions displayed below.] Iguana, Incorporated, 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 $13 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 April May 310 320 370 470 June July August 445 495 Variable manufacturing overhead is incurred at a rate of $0.50 per unit produced. Annual fixed manufacturing overhead is estimated to be $4,800 ($400 per month) for expected production of 4,800 units for the year. Selling and administrative expenses are estimated at $500 per month plus $0.50 per unit sold. Iguana, Incorporated, had $10,500 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 $2,200. All other operating costs are paid during the month incurred. Monthly fixed manufacturing overhead includes $220 in depreciation. During April, Iguana plans to pay $3,700 for a piece of equipment. Required: 1. Compute the budgeted cash receipts for Iguana. 2. Compute the budgeted cash payments for Iguana. 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. No interest is charged if the loan is paid off by the end of the next quarter.
Required information [The following information applies to the questions displayed below.] Iguana, Incorporated, 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 $13 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 April May 310 320 370 470 June July August 445 495 Variable manufacturing overhead is incurred at a rate of $0.50 per unit produced. Annual fixed manufacturing overhead is estimated to be $4,800 ($400 per month) for expected production of 4,800 units for the year. Selling and administrative expenses are estimated at $500 per month plus $0.50 per unit sold. Iguana, Incorporated, had $10,500 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 $2,200. All other operating costs are paid during the month incurred. Monthly fixed manufacturing overhead includes $220 in depreciation. During April, Iguana plans to pay $3,700 for a piece of equipment. Required: 1. Compute the budgeted cash receipts for Iguana. 2. Compute the budgeted cash payments for Iguana. 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. No interest is charged if the loan is paid off by the end of the next quarter.
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter20: Inventory Management: Economic Order Quantity, Jit, And The Theory Of Constraints
Section: Chapter Questions
Problem 2CE: Sterling Corporation has an EOQ of 5,000 units. The company uses an average of 500 units per day. An...
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![Required information
[The following information applies to the questions displayed below.]
Iguana, Incorporated, 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 $13
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
April
May
June
July
August
310
320
370
470
445
495
Variable manufacturing overhead is incurred at a rate of $0.50 per unit produced. Annual fixed manufacturing overhead is
estimated to be $4,800 ($400 per month) for expected production of 4,800 units for the year. Selling and administrative
expenses are estimated at $500 per month plus $0.50 per unit sold.
Iguana, Incorporated, had $10,500 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 $2,200. All other operating costs are paid during the month
incurred. Monthly fixed manufacturing overhead includes $220 in depreciation. During April, Iguana plans to pay $3,700
for a piece of equipment.
Required:
1. Compute the budgeted cash receipts for Iguana.
2. Compute the budgeted cash payments for Iguana.
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. No interest is charged if the loan is paid off by the end of the next quarter.
Complete this question by entering your answers in the tabs below.
Required 1
Required 2 Required 3
Compute the budgeted cash receipts for Iguana.
Note: Do not round your intermediate calculations. Round final answers to 2 decimal places.
Budgeted Cash Receipts
April
May
June
2nd Quarter Total](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fbe3f1aae-f982-44ca-a53d-f7ba9f0dfef9%2Fe7ab0a67-f444-42a8-a648-2e4731ee8e2f%2Ftdyesa_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Required information
[The following information applies to the questions displayed below.]
Iguana, Incorporated, 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 $13
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
April
May
June
July
August
310
320
370
470
445
495
Variable manufacturing overhead is incurred at a rate of $0.50 per unit produced. Annual fixed manufacturing overhead is
estimated to be $4,800 ($400 per month) for expected production of 4,800 units for the year. Selling and administrative
expenses are estimated at $500 per month plus $0.50 per unit sold.
Iguana, Incorporated, had $10,500 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 $2,200. All other operating costs are paid during the month
incurred. Monthly fixed manufacturing overhead includes $220 in depreciation. During April, Iguana plans to pay $3,700
for a piece of equipment.
Required:
1. Compute the budgeted cash receipts for Iguana.
2. Compute the budgeted cash payments for Iguana.
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. No interest is charged if the loan is paid off by the end of the next quarter.
Complete this question by entering your answers in the tabs below.
Required 1
Required 2 Required 3
Compute the budgeted cash receipts for Iguana.
Note: Do not round your intermediate calculations. Round final answers to 2 decimal places.
Budgeted Cash Receipts
April
May
June
2nd Quarter Total
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