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 $11 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 290 April 280 May 330 June 430 July 405 August 455 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 $700 per month plus $0.50 per unit sold. Iguana, Inc., had $11,100 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 $180 in depreciation. During April, Iguana plans to pay $3,300 for a piece of equipment. Required: Compute the following for Iguana, Inc., for the second quarter (April, May, and June). What are the budgeted cost of direct materials purchases for April, May, and June? I figured out April 2,568 and May 3,080 How do I figure out June? Production units 420 Materials 4 Materrials needed 1,680 ending inventory ??? 30% of which number?? begin inventory 504 Unit of material Cost $2.00 Thank you

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 $11 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 290 April 280 May 330 June 430 July 405 August 455 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 $700 per month plus $0.50 per unit sold. Iguana, Inc., had $11,100 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 $180 in depreciation. During April, Iguana plans to pay $3,300 for a piece of equipment. Required: Compute the following for Iguana, Inc., for the second quarter (April, May, and June). What are the budgeted cost of direct materials purchases for April, May, and June? I figured out April 2,568 and May 3,080 How do I figure out June? Production units 420 Materials 4 Materrials needed 1,680 ending inventory ??? 30% of which number?? begin inventory 504 Unit of material Cost $2.00 Thank you

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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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	290
April	280
May	330
June	430
July	405
August	455

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 $700 per month plus $0.50 per unit sold.

Iguana, Inc., had $11,100 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 $180 in depreciation. During April, Iguana plans to pay $3,300 for a piece of equipment.

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

What are the budgeted cost of direct materials purchases for April, May, and June?

I figured out April 2,568 and May 3,080

How do I figure out June?

Production units 420

Materials 4

Materrials needed 1,680

ending inventory ??? 30% of which number??

begin inventory 504

Unit of material

Cost $2.00

Thank you

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