Question

Problem 20-4A Manufacturing: Preparation of a complete master budget LO P1, P2, P3 The management of Zigby Manufacturing prepared the following estimated balance sheet for March 2017: ZIGBY MANUFACTURING Estimated Balance Sheet March 31, 2017 Assets Cash Accounts receivable Raw materials inventory Finished goods inventory Total current assets Equipment, gross Accumulated depreciation Equipment, net Total assets Liabilities and Equity Accounts payable Short-term notes payable Total current liabilities Long-term note payable Total liabilities Common stock Retained earnings Total stockholders' equity Total liabilities and equity $ 59,000 487,500 93,010 433,000 1,072,510 638,000 (169,000) 469,000 $1,541,510 $ 215,410 31,000 246,410 530,000 776,410 354,000 411,100 765,100 $1,541,510

Answer 1

ZIGBY MANUFACTURING Sales Budget April, May, and June 2017 Budgeted Unit Sales Budgeted Unit Price Budgeted Total Dollars 25000 650000 17000 4420001 224001 582400 644001 1674400 April 2017 May 2017 June 2017 Totals for the quarter 26 May June Next month's budgeted sales (units) Ratio of inventory to future sales Budgeted ending inventory (units) Budgeted units sales for month Required units of available production Beginning inventory (units) Units to be produced Production Budget April, May, and June 2017 April 17000 80% 13600 25000 38600 20000 18600 22400 80% 17920 17000 349201 13600 21320 Total 25000 80% 20000 22400 42400 17920 24480 64400 May June Total Production budget (units) Materials requirements per unit Materials needed for production Budgeted ending inventory Total materials requirements (units) Beginning inventory Materials to be purchased Material price per unit Total cost of direct material purchases Raw Materials Budget April, May, and June 2017 April 18600 0.5 9300 5330 14630 46501 9980| 21320 0.51 10660 6120 16780 5330 11450 24480 0.5 12240 5900 18140 6120 12020 20 20 201 199600 229000 240400 669000

Direct Labor Budget April, May, and June 2017 April May 18600 June 21320 0.51 0.5 Budgeted production (units) Labor requirements per unit (hours) Total labor hours needed Labor rate (per hour) Labor dollars Total 24480 0.5 12240 32200 15 15 183600 483000 9300 15 10660 15 159900 1395001 Factory Overhead Budget April, May, and June 2017 April 93000 May June Total 12240 4.6 4.6 Labor hours needed Variable factory overhead rate Budgeted variable overhead Budgeted fixed overhead Budgeted total overhead 42780 397101 82490 10660 4.6) 49036 39710 88746 56304 148120 39710119130 96014 267250 June Budgeted sales Sales commission percent Sales commissions Sales salaries Total selling expenses Selling Expense Budget April, May, and June 2017 April May 650000 442000 5% 5% 325001 22100 4900 4900 37400 27000 Total 582400 5% 291201 83720 4900 14700 34020 98420 June General and Administrative Expense Budgets April, May, and June 2017 April May Salaries 34000 34000 Interest on long-term note (500000*0.8%) 4,240 4,240 Total expenses 38,2401 38,240 Total 34000 102000 4.240 12720 38,240 114720 Calculation of Cash receipts from customers April May Total budgeted sales Cash sales Sales on credit June 442000 582400 110500 145600 331500436800 650000 162500 487500 25% 75% May Current month's cash sales Collections of receivables Total cash receipts Total cash receipts from customers April 162500 487500 650000 June 110500 145600 487500 331500 598000477100

Cash Budget April, May, and June 2017 April May June Beginning cash balance 59000 204360 299584 Cash receipts from customers 650000 598000 477100 Total cash available 709000 802360776684 Cash disbursements: Payments for raw materials 215410 199600 229000 Payments for direct labor 139500 159900 183600 Payments for variable overhead 42780 49036 56304 Sales commissions 32500 22100 29120 Sales salaries 4900 4900 4900 General & administrative salaries | 34000 34000 34000 Dividends 29000 Loan interest (31000* 1%) 31000 Long-term note interest 4240 4240 4240 Purchases of equipment 149000 Taxes paid | 이 이 이 Total cash disbursements 473640 502776 690164 Preliminary cash balance 235360 299584 86520 Additional loan (loan repayment) -31000 0 11480 Ending cash balance 204360 299584 98000 Loan balance May Loan balance - Beginning of month Additional loan (loan repayment) Loan balance - End of month April 31000 -31000 June 0 0 11480 0 11480

1674400 1394260 280140 Budgeted Income statement For the three month ended June 30, 2017 sales cost of goods sold (64400*21.65) Gross margin Operating expense: Sales commissions Sales salaries General administrative salaries Long term note interest Bank loan interest Total operating expense Income before taxes Income tax at 40% Net income 83720 14700 102000 127201 310 213450 66690 26676 40014

Budgeted Balance sheet June 30, 2017 Current Assets Cash Account Receivable Finished goods inventory (20000*21.65) Raw material inventory (5900*20) Total Current Assets Equipment, Gross (638000+ 149000) accumulated depreciation (169000+119130) Equipment, net Total Assets 980001 436800 433000 118000 1085800 787000 -288130| 498870 1584670 Liabilities and Equity Liabilities Account Payable Bank loan payable Income tax payable Total current liabilities Long term note payable stockholder Equity Common Stock Retained Earnings: (411100+40014-29000) Total stockholder equity Total Liability and Equity 2404001 11480 26676 278556 530000 3540001 422114 776114 1584670