Question

The management of Zigby Manufacturing prepared the following estimated balance sheet for March 2019. ZIGBY MANUFACTURING Estimated Balance Sheet March 31, 2019 Assets Cash Accounts receivable Raw materials inventory Finished goods Inventory Total current assets Equipment Accumulated depreciation Equipment, net Total assets Liabilities and Equity Accounts payable Short-term notes payable Total current liabilities Long-term note payable Total liabilities Connon stock Retained earnings Total stockholders equity Total liabilities and equity 65.ee 434,850 87,505 374 640 961,995 624,000 (162,888) 462.000 $ 1,423,995 $ 199,485 24,000 223, 485 528,888 743, 485 347, e88 333,590 680,590 1,423,995 To prepare a master budget for April, May, and June of 2019, management gathers the following Information a. Sales for March total 22,300 units. Forecasted sales in units are as follows: April, 22.300: May, 16.300: June, 22,700, and July. 22,300. Sales of 252.000 units are forecasted for the entire year. The product's selling price is $26.00 per unit and its total product cost is $21.00 per unit. b. Company policy calls for a given month's ending raw materials Inventory to equal 50% of the next month's materials requirements The March 31 raw materials Inventory is 4,375 units, which complies with the policy. The expected June 30 ending raw materials Inventory Is 5,200 units. Raw materials cost $20 per unit. Each finished unit requires 0.50 units of raw materials. c. Company policy calls for a given month's ending finished goods Inventory to equal 80% of the next month's expected unit sales. The March 31 finished goods Inventory is 17.840 units, which complies with the policy. d. Each finished unit requires 0.50 hours of direct labor at a rate of $15 per hour. e. Overhead is allocated based on direct labor hours. The predetermined variable overhead rate is $3.90 per direct labor hour. Depreciation of $31,670 per month is treated as fixed factory overhead. f. Sales representatives' commissions are 10% of sales and are paid in the month of the sales. The sales manager's monthly salary is $4,200. g. Monthly general and administrative expenses Include $24,000 administrative salaries and 0.9% monthly Interest on the long-term note payable. h. The company expects 25% of sales to be for cash and the remaining 75% on credit. Receivables are collected in full in the month following the sale (none are collected in the month of the sale). L. All raw materials purchases are on credit, and no payables arise from any other transactions. One month's raw materials purchases are fully paid in the next month. J. The minimum ending cash balance for all months is $62,000. If necessary, the company borrows enough cash using a short-term note to reach the minimum. Short-term notes require an Interest payment of 1% at each month-end before any repayment). If the ending cash balance exceeds the minimum, the excess will be applied to repaying the short-term notes payable balance. k. Dividends of $22.000 are to be declared and paid in May. L. No cash payments for Income taxes are to be made during the second calendar quarter. Income tax will be assessed at 40% In the quarter and paid in the third calendar quarter. m. Equipment purchases of $142.000 are budgeted for the last day of June. Required: Prepare the following budgets and other financial Information as required. All budgets and other financial Information should be prepared for the second calendar quarter, except as otherwise noted below. (Round calculations up to the nearest whole dollar, except for the amount of cash sales, which should be rounded down to the nearest whole dollar.): Prepare the fone second calendar Quaruhich should be 1. Sales budget. 2. Production budget. 3. Raw materials budget. 4. Direct labor budget. 5. Factory overhead budget. 6. Selling expense budget. 7. General and administrative expense budget. 8. Cash budget 9. Budgeted Income statement for the entire second quarter (not for each month separately). 10. Budgeted balance sheet.

Answer 1

Answer to Requirement 1. ZIGBY MANUFACTURING Sales Budget April 22,300 26.00 579,800.00 Budgeted Unit Sales Budgeted Unit Price Budgeted Total Sales (in Dollars) May 16,300 26.00 423,800.00 June 22,700 26.00 590,200.00 Total 61,300 26.00 1,593,800.00 Answer to Requirement 2. May June Total Next Month's Budgeted Sales Ratio of Inventory to Future Sales Budgeted Ending Inventory Budgeted Unit Sales for Month Required Units of Available Production Beginning Inventory Units to Produced ZIGBY MANUFACTURING Production Budget April 16,300 80% 13,040 22,300 35,340 17,840 17,500 22,700 80% 18,160 16,300 34,460 13,040 21,420 22,300 80% 17,840 22,700 40,540 18,160 22,380 61 a 61,300

Answer to Requirement 3. Total Production Budget (Units) Material Requirements per unit Materials needed for Production Budgeted Ending Inventory Total Material Requirements (units) Beginning Inventory Materials to be purchased Material price per unit Total Cost of Direct Materials Purchases ZIGBY MANUFACTURING Raw Materials Budget April 17,500 0.50 8,750 5,355 14,105 4,375 9,730 21.00 204,330.00 May 21,420 0.50 10,710 5,595 16,305 5,355 10,950 21.00 229,950.00 June 22,380 0.50 11,190 5,200 16,390 5,595 10,795 21.00 226,695.00 31,475 21.00 660,975.00 Answer to Requirement 4. Total Budgeted Production (Units) Labor Requirement per unit (Hours) Total Labor Hours needed Labor Rate (per hour) Labor Dollars ZIGBY MANUFACTURING Direct Labor Budget April 17,500 0.50 8,750 15.00 131,250.00 May 21,420 0.50 10,710 15.00 160,650.00 June 22,380 0.50 11,190 15.00 167,850.00 30,650 15.00 459,750.00

Answer to Requirement 5. Total Labour Hours needed Variable Factory Overhead Rate Budgeted Variable Overhead Budgeted Fixed Overhead Budgeted Total Overhead Answer to Requirement 6. ZIGBY MANUFACTURING Factory Overhead Budget May 8,750 10,710 3.90 3.90 34,125.00 41,769.00 31,670.00 31,670.00 65,795.00 73,439.00 June 11,190 3.90 43,641.00 31,670.00 75,311.00 119,535.00 95,010.00 214,545.00 June Total Budgeted Sales Sales Commission percent Sales Commissions Sales Salaries Total Selling Expenses ZIGBY MANUFACTURING Selling Expenses Budget April 579,800 10% 57,980 4,200 62,180 May 423,800 10% 42,380 4,200 46,580 590,200 10% 59,020 4,200 63,220 159,380 12,600 171,980

Answer to requirement 7. June ZIGBY MANUFACTURING General and Administrative Expenses Budget April May 24,000 24,000 4,680 4,680 28,680 28,680 Salaries Interest on Long-Term Note Total Expenses 24,000 4,680 28,680 Total 72,000 14,040 86,040