Question

Problem 22-4A 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. 10 points eBook Print 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 ong-term note payable Total liabilities Common stock Retained earnings Total stockholders' equity Total liabilities and equity $ 48,000 438, 750 87,900 383, 760 958, 410 616,000 (158,000) 458,000 $1,416,410 De References $ 187,200 20,000 207,200 508,000 715,200 343,000 358,210 701,210 $1,416,410 To prepare a master budget for April, May, and June of 2019, management gathers the following information.

Answer 1

Particulars April, 2019 May, 2019 June, 2019 Totals for the Second Quarter ZIGBY Manufacturing Sales Budget April, May and June 2019 Budgeted Budgeted Budgeted Unit Sales Unit Price Sales Dollars 19,500 $ 30.00 $ 585,000 17,100 $ 30.00 $ 513,000 21,300 $ 30.00 $ 639,000 57,900 $ 1,737,000 Total ZIGBY Manufacturing Production Budget April, May and June 2019 Particulars April Next Month Budgeted Sales (In Units) 17,100 Ratio of Inventory to future sales 80% Budgeted Ending Inventory (Units) 13,680 Budgeted Unit Sales for the month 19,500 Required Units of available production 33,180 Less : Beginning Finished goods Inventory (15,600) Units to be produced 17,580 May 21,300 80% 17,040 17,100 34,140 (13,680) 20,460 June 19,500 80% 15,600 21,300 36,900 (17,040) 19,860 57,900 Total ZIGBY Manufacturing Raw Materials Budget April, May and June 2019 Particulars April Production Budget (Units) 17,580 Raw Materials per Unit 0.50 Material needed for Production 8,790 Budgeted Ending Inventory 5,115 Total Raw Material requirement (Units) 13,905 Beginning Inventory (4,395) Materials to be purchased 9,510 Material Price per Unit $ 20 $ Budgeted Raw Material Purchases $ 190,200 $ May 20,460 0.50 10,230 4,965 15,195 (5,115) 10,080 20 $ 201,600 $ June 19,860 0.50 9,930 4,800 14,730 (4,965) 9,765 20 $ 195,300 $ 28,950 4,800 33,750 (4,395) 29,355 20 587,100

Total ZIGBY Manufacturing Direct Labour Budget April, May and June 2019 Particulars April May June Budgeted Production (Units) 17,580 20,460 19,860 Labor hours requirement per unit (hours) 0.50 0.50 0.50 Total Labour Hours needed 8,790 10,230 9,930 Labour Cost Rate (per hour) $ 23 $ 23 $ 23 $ Budgeted Labour Cost $ 202,170 $ 235,290 $ 228,390 $ 28,950 23 665,850 Total ZIGBY Manufacturing Factory Overhead Budget April, May and June 2019 April 8,790 3.40 $ $ 29,886 $ 27,020 56,906 Particulars Labour Hours Needed Variable Factory Overhead Rate Budgeted Variable Overhead Budgeted Fixed Overhead Budgeted Total Overhead $ May 10,230 3.40 $ 34,782 $ 27,020 61,802 June 9,930 3.40 33,762 $ 27,020 60,782 98,430 81,060 179,490 Total ZIGBY Manufacturing Selling Expense Budget April, May and June 2019 Particulars April Budgeted Sales 585,000 Sales Commission Percent 7% Sales Commission 40,950 Sales Manager's Salary 3,800 Total Budgeted Selling Expense 44,750 May 513,000 7% 35,910 3,800 39,710 June 639,000 7% 44,730 3,800 48,530 121,590 11,400 132,990

ZIGBY Manufacturing General and Administrative Expenses Budget April, May and June 2019 Particulars April May Administrative Salaries 20,000 20,000 Interest on Long-term Note Payable 2,540 2,540 Total Budgeted G&A Expenses 22,540 22,540 June 20,000 2,540 22,540 Total 60,000 7,620 67,620 Particulars Total Budgeted Sales Cash Sales Sales made on Credit April 585,000 146,250 438,750 May 513,000 128,250 384,750 June 639,000 159,750 479,250 25% 75% Total Cash Receipts from Customers Particulars Current Month cash sales Collection of Receivables April 146,250 438,750 585,000 May 128,250 438,750 567,000 June 159,750 384,750 544,500

Particulars Beginning Cash Balance Cash Receipts from Customers Total Cash Available ZIGBY Manufacturing Cash Budget April, May and June 2019 April 48,000 585,000 633,000 May 126,254 567,000 693,254 June 152,732 544,500 697,232 Cash Payments for : Raw Material Direct Labour Variable Overheads Sales Commission Sales Salaries General & Administrative Salaries Dividends Loan Interest Long-term Notes Interest Purchase of Equipment Total Cash Payments 187,200 202,170 29,886 40,950 3,800 20,000 190,200 235,290 34,782 35,910 3,800 20,000 18,000 201,600 228,390 33,762 44,730 3,800 20,000 200 2,540 2,540 2,540 138,000 672,822 486,746 540,522 152,732 Preliminary Cash Balance Additional Loan (Loan Repayment) Ending Cash Balance 146,254 (20,000) 126,254 24,410 41,838 66,248 152,732 May June Particulars Loan Balance - Beginning of the Month Additional Loan (Loan Repayment) Loan Balance - End of the Month Loan Balance April 20,000 (20,000) 41,838 41,838

Amount ($) 1,737,000 1,424,340 312,660 ZIGBY Manufacturing Income Statement For the three months ended June 2019 Particulars $ Sales Cost of goods sold Gross Profit Operating Expenses : Sales Commissions 121,590 Sales Salaries 11,400 General Administrative Salaries 60,000 Long-tem Notes Interest 7,620 Bank Loan Interest Expense 200 Total Operating Expenses Income before taxes Income Tax Net Income 200,810 111,850 39,148 72,703

$ Amount ($) ZIGBY Manufacturing Balance Sheet June 30, 2019 Particulars Assets Cash Accounts Receivable Raw Material Inventory Finished Goods Inventory Total Current Assets Equipment Accumulated Depreciation Equipment, Net Total Assets 66,248 479,250 96,000 383,760 1,025,258 754,000 239,060 514,940 1,540,198 195,300 41,838 39,148 Liabilities and Equity Liabilities Accounts Payable Bank Loan Payable Income Taxes Payable Total Current Liabilities Long-term notes Payable Stockholders' Equity Common Stock Retained Earnings Total Stockholders' Equity Total Liabilities and Equity 276,286 508,000 343,000 412,913 755,913 1,540,198