Question

Required information (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 $2.00 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 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 360 410 March April May June July August Variable manufacturing overhead is incurred at a rate of $0.40 per unit produced, Annual foxed manufacturing overhead is estimated to be $8.400 (5700 per month for expected production of 4,000 units for the year Selling and administrative expenses are estimated at $750 per month plus $0.50 per unit sold. Iguana, Inc., had $13.500 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 totaled $2,800. All other operating costs are paid during the month incurred Monthly foxed manufacturing overhead includes $260 in depreciation. During April, Iguana plans to pay $2.500 for a piece of equipment Required: Complete louana's budgeted income statement for quarter 2. (Round cost per unit in intermediate calculations and final twee

Answer 1

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Iguana
Workings
Sales Revenue	April	May	June	Total	Note
Budgeted Sales units	360.00	410.00	510.00		A
Sell price per unit	25.00	25.00	25.00		B
Budgeted Sales Revenue	9,000.00	10,250.00	12,750.00	32,000.00	C=A*B
Budgeted cost of Direct Material used	April	May	June	Total
Budgeted Sales units	360.00	410.00	510.00		See A
Bamboo required per unit	4.00	4.00	4.00		D
Bamboo required	1,440.00	1,640.00	2,040.00		E=A*D
Cost per foot	2.00	2.00	2.00		F
Budgeted cost of Direct Material used	2,880.00	3,280.00	4,080.00	10,240.00	G=E*F
Budgeted labor cost for units sold	April	May	June	Total
Budgeted Sales units	360.00	410.00	510.00		See A
Direct Labor hour per unit	0.50	0.50	0.50		H
Direct Labor hour required	180.00	205.00	255.00		I=A*H
Labor Cost per hour	14.00	14.00	14.00		J
Budgeted Direct Labor cost	2,520.00	2,870.00	3,570.00	8,960.00	K=I*J
Budgeted manufacturing overhead for units sold	April	May	June	Total
Budgeted Sales units	360.00	410.00	510.00		See A
Variable manufacturing overhead per unit	0.40	0.40	0.40		L
Variable manufacturing overhead Budget	144.00	164.00	204.00	512.00	M=A*L
Add: Fixed manufacturing overhead	700.00	700.00	700.00
Budgeted manufacturing overhead	844.00	864.00	904.00	2,612.00	N
Selling & admin expenses Budget	April	May	June	Total	Note
Budgeted Sales units	360.00	410.00	510.00		See A
Variable Selling & admin expenses per unit	0.50	0.50	0.50		O
Variable Selling & admin expenses Budget	180.00	205.00	255.00	640.00	P=A*O
Add: Fixed Selling & admin expenses	750.00	750.00	750.00	2,250.00
Budgeted Selling & admin expenses Budget	930.00	955.00	1,005.00	2,890.00	Q
Final Answer
Income Statement	April	May	June	Total
Sales Revenue	9,000.00	10,250.00	12,750.00	32,000.00	See C
Less: cost of goods sold
Budgeted cost of Direct Material used	2,880.00	3,280.00	4,080.00	10,240.00	See G
Budgeted Direct Labor cost	2,520.00	2,870.00	3,570.00	8,960.00	See K
Budgeted manufacturing overhead	844.00	864.00	904.00	2,612.00	See N
Budgeted Gross margin	2,756.00	3,236.00	4,196.00	10,188.00
Less: Budgeted Selling & admin expenses	930.00	955.00	1,005.00	2,890.00	See Q
Net Gross margin	1,826.00	2,281.00	3,191.00	7,298.00