SB Problem PA8-1 to PA8-3

[The following information applies to the questions displayed below.] Iguana, Inc., manufactures bamboo picture frames that sell for $25 each. Each frame requires 4 linear feet of bamboo, which costs $2.50 per foot. Each frame takes approximately 30 minutes to build, and the labor rate averages $14 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	315
April	330
May	380
June	480
July	455
August	505

Variable manufacturing overhead is incurred at a rate of $0.60 per unit produced. Annual fixed manufacturing overhead is estimated to be $7,200 ($600 per month) for expected production of 3,000 units for the year. Selling and administrative expenses are estimated at $650 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 $230 in depreciation. During April, Iguana plans to pay $2,000 for a piece of equipment.

References

5.

value: 10.00 points

Required information

PA8-1 Preparing Operating Budgets [LO 8-3a, b, c, d, e, f, g]

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

References

eBook & Resources

Check my work

6.

value: 10.00 points

Required information

PA8-2 Preparing Budgeted Income Statement [LO 8-3h]

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

References

eBook & Resources

Check my work

7.

value: 10.00 points

Required information

PA8-3 Preparing Cash Budget [LO 8-4]

Required: 1. Compute the budgeted cash receipts for Iguana. (Do not round your intermediate calculations. Round final answers to 2 decimal places.) 2. Compute the budgeted cash payments for Iguana. (Do not round your intermediate calculations. Round final answers to 2 decimal places.) 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.)