Question

Слеск 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 Common stock Retained earnings Total stockholders' equity Total liabilities and equity $ 50,000 434,240 84,210 368,000 936,450 602,000 (151,000) 451,000 $1,387,450 $ 196,610 12,000 208,610 505,000 713,610 336,000 337,840 673,840 $1,387,450 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, 15,300; June, 20,400; and July, 23,000. Sales of 241,000 units are forecasted for the entire year. The product's selling price is $23.60 per unit and its total product cost is $20.00 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 4,210 units, which complies with the policy. The expected June 30 ending raw materials inventory is 4,100 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 18,400 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 $2.80 per direct labor hour. Depreciation of $21,520 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 $3,100. g. Monthly general and administrative expenses include $13,000 administrative salaries and 0.5% monthly interest on the long- term note payable. h. The company expects 20% of sales to be for cash and the remaining 80% on credit. Receivables are collected in full in the month following the sale (none are collected in the month of the sale). i. All raw materials purchases are on credit, and no payables arise from any other transactions. One month's raw materials

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	$23.60	$542,800.00
May-19	15300	$23.60	$361,080.00
Jun-19	20400	$23.60	$481,440.00
Totals for the second quarter	58700	$23.60	$1,385,320.00

Solution 2:

ZIGBY MANUFACTURING
Production Budget
April, May, and June 2019
	April	May	June
Next month's budgeted sales (units)	15300	20400	23000
Ratio of inventory to future sales	80%	80%	80%
Desired ending inventory	12240	16320	18400
Budgeted sales units	23000	15300	20400
Required units of available production	35240	31620	38800
Beginning inventory	18400	12240	16320
Units to be produced	16840	19380	22480

Solution 3:

ZIGBY MANUFACTURING
Raw Materials Budget
April, May, and June 2019
	April	May	June
Production budget (units)	16840	19380	22480
Raw material per unit	0.5	0.5	0.5
Materials needed for production	8420	9690	11240
Desired ending inventory	4845	5620	4100
Total materials requirements (units)	13265	15310	15340
Beginning inventory	4210	4845	5620
Materials to be purchased	9055	10465	9720
Material price per unit	$20.00	$20.00	$20.00
Budgeted raw material purchases	$181,100.00	$209,300.00	$194,400.00

Solution 4:

ZIGBY MANUFACTURING
Direct Labor Budget
April, May, and June 2019
	April	May	June	Total
Budgeted production (units)	16840	19380	22480	58700
Direct labor hour per unit	0.5	0.5	0.5	0.5
Total labor hours needed	8420	9690	11240	29350
Direct labor rate per hour	$15.00	$15.00	$15.00	$15.00
Budgeted direct labor cost	$126,300.00	$145,350.00	$168,600.00	$440,250.00

Solution 5:

ZIGBY MANUFACTURING
Factory overhead Budget
April, May, and June 2019
	April	May	June	Total
Labor hours needed	8420	9690	11240	29350
Variable overhead rate per hour	$2.80	$2.80	$2.80	$2.80
Budgeted variable overhead	$23,576.00	$27,132.00	$31,472.00	$82,180.00
Budgeted fixed overhead	$21,520.00	$21,520.00	$21,520.00	$64,560.00
Budgeted total overhead	$45,096.00	$48,652.00	$52,992.00	$146,740.00

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