Iguana, Incorporated, 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 $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 April May June July August 275 250 300 400 375 425 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.
Iguana, Incorporated, 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 $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 April May June July August 275 250 300 400 375 425 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.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![PA8-2 (Static) Preparing Budgeted Income Statement [LO 8-3h]
Required:
Complete Iguana's budgeted income statement for quarter 2.
Note: Round cost per unit in intermediate calculations to 2 decimal places.
Budgeted Gross Margin
Budgeted Net Operating Income
IGUANA, INCORPORATED
Budgeted Income Statement
For the Quarter Ending June
April
$
$
0 $
0 $
May
0 $
0 $
June
2nd Quarter
Total
0 $
0
0](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F2712b8fb-a8e3-4bba-9fd3-39ebd6974c0c%2Faa61cdc2-02a4-4b15-9b80-9885cccb5bcd%2Fbelq1d_processed.jpeg&w=3840&q=75)
Transcribed Image Text:PA8-2 (Static) Preparing Budgeted Income Statement [LO 8-3h]
Required:
Complete Iguana's budgeted income statement for quarter 2.
Note: Round cost per unit in intermediate calculations to 2 decimal places.
Budgeted Gross Margin
Budgeted Net Operating Income
IGUANA, INCORPORATED
Budgeted Income Statement
For the Quarter Ending June
April
$
$
0 $
0 $
May
0 $
0 $
June
2nd Quarter
Total
0 $
0
0
Transcribed Image Text:Iguana, Incorporated, 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
$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
April
May
June
July
August
275
250
300
400
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.
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