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 $13 per hour. Iguana has the following inventory policies:

Ending finished goods inventory should be 40 percent of next months sales.

Ending raw materials inventory should be 30 percent of next months production.

Expected unit sales (frames) for the upcoming months follow:

March	285
April	270
May	320
June	420
July	395
August	445

Variable manufacturing overhead is incurred at a rate of $0.50 per unit produced. Annual fixed manufacturing overhead is estimated to be $8,400 ($700 per month) for expected production of 4,200 units for the year. Selling and administrative expenses are estimated at $750 per month plus $0.50 per unit sold. Iguana, Inc., had $11,000 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 $3,000. All other operating costs are paid during the month incurred. Monthly fixed manufacturing overhead includes $170 in depreciation. During April, Iguana plans to pay $3,200 for a piece of equipment.

3.

value: 20.00 points

Required information

Required: Compute the following for Iguana, Inc., for the second quarter (April, May, and June).

References

eBook & Resources

WorksheetLearning Objective: 08-03b Prepare the following components of the operating budget: Production budget.Learning Objective: 08-03e Prepare the following components of the operating budget: Manufacturing overhead budget.

Difficulty: 3 HardLearning Objective: 08-03c Prepare the following components of the operating budget: Raw materials purchases budget.Learning Objective: 08-03f Prepare the following components of the operating budget: Cost of goods sold budget.

Learning Objective: 08-03a Prepare the following components of the operating budget: Sales budget.Learning Objective: 08-03d Prepare the following components of the operating budget: Direct labor budget.Learning Objective: 08-03g Prepare the following components of the operating budget: Selling and administrative expense budget.

Check my work

4.

value: 20.00 points

Required information

Required: Complete Iguana's budgeted income statement for quarter 2. (Round cost per unit in intermediate calculations and final answers to 2 decimal places.)