Question

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 $ 65, 000 437,760 90,200 308,028 900,988 630,000 (165,000) 465,000 $1,365,988 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 eqquity s 204,500 27,000 231,500 515,000 746, 500 350,000 269,488 619,488 $1,365,988 To prepare a master budget for April, May, and June of 2017, management gathers the following information: a. Sales for March total 22,800 units. Forecasted sales in units are as follows: April, 22,800; May, 16,000; June, 23,000; and July, 22,800. Sales of 255,000 units are forecasted for the entire year. The product's selling price is $24.00 per unit and its total product cost is $19.30 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 4,510 units, which complies with the policy. The expected June 30 ending raw materials inventory is 5,500 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 15,960 units, which complies with the policy. d. Each finished unit requires 0.50 hours of direct labor at a rate of $11 per hour e. Overhead is allocated based on direct labor hours. The predetermined variable overhead rate is $4.20 per direct labor hour f. Sales representatives' commissions are 10% of sales and are paid in the month of the sales. The sales manager's monthly salary is g. Monthly general and administrative expenses include $27,000 administrative salaries and 0.6% monthly interest on the long-term 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 i. All raw materials purchases are on credit, and no payables arise from any other transactions. One month's raw materials purchases j. The minimum ending cash balance for all months is $55,000. If necessary, the company borrows enough cash using a short-term Depreciation of $35,020 per month is treated as fixed factory overhead $4,500 note payable following the sale (none are collected in the month of the sale) are fully paid in the next month. 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 $25,000 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 $145,000 are budgeted for the last day of June

Answer 1

ZIGBY MANUFAC TURING Sales Budget April, May, and June 2017 Budgeted Unit Sales Budgeted Unit Price Budgeted Total Dollars 547,200 384,000 2017 May 2017 June 2017 Totals for the 22,800 16,000 24 24 24 1,483,200 Production Budget il, May, and June 2017 Ma June Total 23,000 70% 16,100 16,000 32,100 1,200 20,900 22,800 70% 15,960 Next month's Ratio of inventory to future sales Bu Budgeted units sales for month Re Be Units to be sales (units 16,000 70% 11,200 22,800 34,000 ted inventory (units units of available inventory (units ced ction 38,960 16,100 22,860 61800 18,040 Raw Materials Budget ril, May, and June 2017 Ma June Total Production budget (units Materials Materials needed for production Budgeted Total materials Be Materials to be purchased Material price per unit Total cost of direct material purchases 20,900 0.5 10450 5,715 6,165 22,860 11430 16,930 11,215 224300 637800 18,040 rements per unit units 14,245 10,940 9,735 20 194700 218800 H Sheet747 Sheet748 / Sheet749 Sheet750 . Sheet751 . Sheet752 Sheet753 Sheet754 Sheet75 US 23/03/2019

Direct Labor Budget April, May, and June 2017 18,040 9,020 99220 ril Ma June Total Budgeted 20,900 0.5 10 450 22,860 ion (units irements per unit (hours 0.5 11.43030900 0.5 Total labor hours needed Labor rate (per hour Labor dollars 114950 25730 339900 Overhead Budget April, May, and June 2017 9020 37884 72,904 ril Ma June Total 11,430 Labor hours needed Variable factory overhead rate Budgeted variable overhead 10,450 ed fixed overhead ed total overhead 35,020 105060 78,910 Selling ense Budget April, May, and June 2017 ril Ma June Total 547,200 384,000 10% ed sales 552,000 Sales commission percent Sales commissions Sales salaries Total s 54720 4,500 59,220 55200 148320 4.500 42,900 4500 13500 ex General and Administrative Expense Budgets April, May, and June 2017 ril Ma June Total 27000 3,090 30,090 27000 2700081000 Interest on long-term note (515000° 6% 30,090 30,090 90270 ト Shee 747 Sheet748 Sheet749 Sheet750 sheet751 Sheet752 Sheet753 Sheet754 Sheet755 RJ ENG 17:08 US 23/03/2019

Calculation of Cash receipts from customers: Ma June Total Cash sales Sales on credit 547 109440 437760 sales 384,000 552,000 20% 80% 76800 110400 307200 441600 Total cash receipts from customers Ma June Current month's cash sales Collections of receivables Total cash rec 109440 437,760 547200 76800 110400 437,760 307,200 514560 417600 Sheet747 Shee(748 Sheet749 . Sheet750 . Sheet751 . Sheet752 . Sheet753 . Sheet754 , sheet755 ENG US 23/03/2019 17:08

Cash Budget ril, May, and June 2017 April May June cash balance Cash receipts from customers Total cash available Cash disbursements 65000 154016 217046 547.200 514,560 417,600 668 576 634 646 204,500194,700 218,800 99.220114,950 125,730 37.884 43,890 48,006 54,72038,40055,200 4,5004,5004,500 27,000 s for raw materials for direct labor Sales commissions Sales salaries General & administrative salaries 27,00027,000 25,000 Loan interest Long-term note interest Purchases of Taxes paid Total cash disbursements 270 3,0903,0903,090 145,000 431,184 451,530 627,326 81,016217,046 7,320 cash balance ditional loan (loan Ending cash balance 27.000 54,016217,046 55,000 Loan balance April May 27000 June Loan balance -B of month ditional loan (loan Loan balance-End of month 0 47,680 01 47680 27,000 Sheet747 Shee(748 Sheet749 . Sheet750 . Sheet751 . Sheet752 Sheet753 . Sheet754 , sheet755 ENG US 23/03/2019

Budgeted Income statement For the three month ended June 30.2017 Budgeted Balance sheet Current Assets Cash Account Receivable Finished Raw material inventory (5500 20 Total Current Assets cost of goods sold (61800 19.3 Gross 1,483,200 192740 290,460 55.000 441600 308028 inventory (15960 19.3) ex Sales commissions Sales salaries General administrative salaries Long term note interest Bank loan interest Total Income before taxes Income tax at 40% Net income 148320 13500 81000 9270 70 Gross (630000+145000 75,000 accumulated depreciation 504,940 1,419,568 net Total Assets 252360 38,100 Liabilities and Equi Liabilities Account Payable Bank loan payable Income tax payable Total current liabilities Long term note payable stockholder E Common Stock Retained Ea Total stockholder Total Liability and Equit 22,860 224300 47,680 287220 515000 269488+22860-25000) 267.348 617348 1419568 0 Sheet747 Shee(748 Sheet749 . Sheet750 . Sheet751 . Sheet752 . Sheet753 . Sheet754 , sheet755 ENG US 23/03/2019 17:09