Question

Problem 07-4A Manufacturing: Preparation of a complete master budget LO P1, P2, P3 The management of Zigby Manufacturing prepared the following estimated balance sheet for March 2019 ZIGBY MANUFACTURING Estimated Balance Sheet March 31, 2019 Assets Cash 99,000 Accounts receivable 500, 250 101,000 402,500 Raw materials inventory Finished goods inventory Total current assets 1,102,750 618,000 (159,000) 459,000 Equipment Accumulated depreciation Equipment, net $ 1,561,750 Total assets Liabilities and Equity Accounts payable Short-term notes payable 209,700 21,000 230,700 Total current liabilities Long-term note payable 505,000 735,700 Total liabilities 344,000 482,050 826,050 $ 1,561,750 Common stock Retained earnings Total stockholders' equity Total liabilities and equity To prepare a master budget for April, May, and June of 2019, management gathers the following information a. Sales for March total 23,000 units. Forecasted sales in units are as follows: April, 23,000; May, 19,000; June, 18,800; and July, 23,000. Sales of 249,000 units are forecasted for the entire year. The product's selling price is $29.00 per unit and its total product cost is $25.00 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 5,050 units, which complies with the policy. The expected June 30 ending raw materials inventory is 4,500 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 70% of the next month's expected unit sales The March 31 finished goods inventory is 16,100 units, which complies with the policy. d. Each finished unit requires 0.50 hours of direct labor at a rate of $24 per hour e. Overhead is allocated based on direct labor hours. The predetermined variable overhead rate is $3.60 per direct labor hour. Depreciation of $24,320 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 $3,900.

Answer 1

Solution 1:

ZIGBY MANUFACTURING
Sales Budget
April, May, and June 2019
	Budgeted Unit Sales	Budgeted Unit Price	Budgeted Sales Dollars
Apr-19	23000	$29.00	$667,000.00
May-19	19000	$29.00	$551,000.00
Jun-19	18800	$29.00	$545,200.00
Totals for the second quarter	60800	$29.00	$1,763,200.00

Solution 2:

ZIGBY MANUFACTURING
Production Budget
April, May, and June 2019
	April	May	June
Next month's budgeted sales (units)	19000	18800	23000
Ratio of inventory to future sales	70%	70%	70%
Desired ending inventory	13300	13160	16100
Budgeted sales units	23000	19000	18800
Required units of available production	36300	32160	34900
Beginning inventory	16100	13300	13160
Units to be produced	20200	18860	21740

Solution 3:

ZIGBY MANUFACTURING
Raw Materials Budget
April, May, and June 2019
	April	May	June
Production budget (units)	20200	18860	21740
Raw material per unit	0.5	0.5	0.5
Materials needed for production	10100	9430	10870
Desired ending inventory	4715	5435	4500
Total materials requirements (units)	14815	14865	15370
Beginning inventory	5050	4715	5435
Materials to be purchased	9765	10150	9935
Material price per unit	$20.00	$20.00	$20.00
Budgeted raw material purchases	$195,300.00	$203,000.00	$198,700.00

Solution 4:

ZIGBY MANUFACTURING
Direct Labor Budget
April, May, and June 2019
	April	May	June	Total
Budgeted production (units)	20200	18860	21740	60800
Direct labor hour per unit	0.5	0.5	0.5	0.5
Total labor hours needed	10100	9430	10870	30400
Direct labor rate per hour	$24.00	$24.00	$24.00	$24.00
Budgeted direct labor cost	$242,400.00	$226,320.00	$260,880.00	$729,600.00

Solution 5:

ZIGBY MANUFACTURING
Factory overhead Budget
April, May, and June 2019
	April	May	June	Total
Labor hours needed	10100	9430	10870	30400
Variable overhead rate per hour	$3.60	$3.60	$3.60	$3.60
Budgeted variable overhead	$36,360.00	$33,948.00	$39,132.00	$109,440.00
Budgeted fixed overhead	$24,320.00	$24,320.00	$24,320.00	$72,960.00
Budgeted total overhead	$60,680.00	$58,268.00	$63,452.00	$182,400.00

Note: I have answered more than required parts as HOMEWORKLIB RULES policy, kindly post separate question for answer of remaining parts.