Iguana, Incorporated, had $10,800 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 $2,000. All other operating costs are paid during the month incurred. Monthly fixed manufacturing overhead includes $150 in depreciation. During April, Iguana plans to pay $3,000 for a piece of equipment. guana, Incorporated, manufactures bamboo picture frames that sell for $25 each. Each frame equires 4 linear feet of bamboo, which costs $2.00 per foot. Each frame takes approximately 30 minutes to build, and the labor rate averages $12.00 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 275 April 250 May 300 June 400 July August 375 425 Variable manufacturing overhead is incurred at a rate of $0.30 per unit produced. Annual fixed manufacturing overhead is estimated to be $7,200 ($600 per month) for expected production of 4,000 units for the year. Selling and administrative expenses are estimated at $650 per month plus $0.60 per unit sold.
Iguana, Incorporated, had $10,800 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 $2,000. All other operating costs are paid during the month incurred. Monthly fixed manufacturing overhead includes $150 in depreciation. During April, Iguana plans to pay $3,000 for a piece of equipment. guana, Incorporated, manufactures bamboo picture frames that sell for $25 each. Each frame equires 4 linear feet of bamboo, which costs $2.00 per foot. Each frame takes approximately 30 minutes to build, and the labor rate averages $12.00 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 275 April 250 May 300 June 400 July August 375 425 Variable manufacturing overhead is incurred at a rate of $0.30 per unit produced. Annual fixed manufacturing overhead is estimated to be $7,200 ($600 per month) for expected production of 4,000 units for the year. Selling and administrative expenses are estimated at $650 per month plus $0.60 per unit sold.
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 7E: Ottis, Inc., uses 640,000 plastic housing units each year in its production of paper shredders. The...
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Transcribed Image Text:Iguana, Incorporated, had $10,800 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 $2,000. All
other operating costs are paid during the month incurred. Monthly fixed manufacturing
overhead includes $150 in depreciation. During April, Iguana plans to pay $3,000 for a piece of
equipment.
Transcribed Image Text:guana, Incorporated, manufactures bamboo picture frames that sell for $25 each. Each frame
equires 4 linear feet of bamboo, which costs $2.00 per foot. Each frame takes approximately
30 minutes to build, and the labor rate averages $12.00 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
275
April
250
May
300
June
400
July
August
375
425
Variable manufacturing overhead is incurred at a rate of $0.30 per unit produced. Annual fixed
manufacturing overhead is estimated to be $7,200 ($600 per month) for expected production of
4,000 units for the year. Selling and administrative expenses are estimated at $650 per month
plus $0.60 per unit sold.
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