Iguana, Inc., manufactures bamboo picture frames that sell for $30 each. Each frame requires 4 linear feet of bamboo, which costs $2.50 per foot. Each frame takes approximately 30 minutes to build, and the labor rate averages $12 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 folow: March 280 April May June 260 310 410 July August 385 435 Variable manufacturing overhead is incurred at a rate of S0.40 per uniT produced. Annual fixed manufacturing overhead is estimated to be $7,800 ($650 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 $10,900 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 sele, Of direct materlals purchases, 80 percent is pald for during the month purchased and 20 percent is pald in the following month. Direct materials purchases for March 1 totaled $2500. Al other operating costs are peid during the month Incurred. Monthly fixed manufacturing overhead includes $160 in depreciation. During April, Iguana plans to pay $3.100 for a piece of equipment.
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
April May June Q 2
Budg. Cost Dir. Materials- 3,010 3,650 4,015 10,675
+ Cash Paid during purchase month -80% 2,408 2,920 3,212 13,868
+ Cash paid in month following purchase-20% 500 602 730 1,832
+ Cash Paid for direct Materials 2,908 3,522 3,942 10,372
+ Cash Paid for direct Labor 1,680 2,100 2,400 6,180
+ MOH 762 790 810 2,362
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+ Sellng and Admin exp. 830 855 905 2,590
+ Cash Paid for Equipent 3,100 3,100
Budgeted Cash Payments 11,378 9,979 11,189 37,874
Trying to calculate Budgeted cash payments, Whare am I going wrong?
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