Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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.

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.)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Front Office Operations And Night Audit Workbook

Authors: Patrick J. Moreo, Gail Sammons, Jim Dougan, James Dougan

1st Edition

0133987698, 978-0133987690

More Books

Students also viewed these Accounting questions