Iguana, Inc., manufactures bamboo picture frames that sell for $25 each. Each frame requires 5 linear feet of bamboo, which costs $2.00 per foot. Each frame takes approximately 30 minutes to build, and the labor rate averages $13.00 per hour. Iguana has the following inventory policies:
| Ending finished goods inventory should be 40 percent of next month's sales. |
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Ending raw materials inventory should be 30 percent of next month's production.
Expected unit sales (frames) for the upcoming months follow:
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| March |
425 |
| April |
400 |
| May |
450 |
| June |
550 |
| July |
450 |
| August |
580 |
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Variable manufacturing overhead is incurred at a rate of $0.30 per unit produced. Annual fixed manufacturing overhead is estimated to be $5,400 ($900 per month) for expected production of 3,000 units for the year. Selling and administrative expenses are estimated at $800 per month plus $0.60 per unit sold.
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Iguana, Inc., had $16,100 cash on hand on April 1... Of its sales, 80 percent is in cash. Of the credit sales, 50% is collected during the month of the sale, and 50% is collected during the month following the sale.
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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 $3,500. All other operating costs are paid during the month incurred. Monthly fixed manufacturing overhead includes $300 in depreciation. During April, Iguana plans to pay $4,500 for a piece of equipment.
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| 1. |
Compute the budgeted cash receipts for Iguana. (Do not round your intermediate calculations. Round final answers to 2 decimal places.)
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April |
May |
June |
2nd Quarter Total |
| Budgeted Cash Receipts |
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| 2. |
Compute the budgeted cash payments for Iguana. (Do not round your intermediate calculations. Round final answers to 2 decimal places.)
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April |
May |
June |
2nd Quarter Total |
| Budgeted Cash Payments |
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| 3. |
Prepare the cash budget for Iguana. Assume the company can borrow in increments of $1,000.00 to maintain a $15,000.00 minimum cash balance.
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April |
May |
June |
2nd Quater total |
| Beginning Cash Balance |
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| Plus: Budgeted Cash Receipts |
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| Less: Budgeted Cash Payments |
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| Preliminary Cash Balance |
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| Cash Borrowed/Repaid |
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| Ending Cash Balance |
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