Question

The management of Zigby Manufacturing prepared the following estimated balance sheet for March 2017 ZIGBY MANUFACTURING Estimated Balance Sheet March 31, 2017 Assets Accounts receivable Ravw materials inventory Finished goods inventory Total cument assets 438.750 Accumulated depreciation 158,000 Total assets Liabilities and Equity Short-tem notes pay able Total current liabilities Long-tem note payable Total stockholders' equity Total liabilities and equity To prepare a master budget for April, May, and June of 2017, management gathers the following information: a. Sales for March total 19,500 units. Forecasted sales in units are as followS: April, 19,500; May, 17,100; June, 21,300; and July, 19,500. Sales of 248,000 units are torecasted tor the entire year. The product's selling 5 1.416,410 price is $30.00 per unit and its total product cost is $24.60 per unit b. Company policy calls tor 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 4.395 units, which complies with the policy The expected June 30 ending raw materials inventory is 4,800 units. Raw materials cost $20 per unit. Each finished unit requires 0.50 units of raw materials C Company policy calls tor a given month's ending finished goods inventory to equal 80% ot the next month's expected unit sales. The March 31 finished goods inventory is 15,600 units which complies with the policy d. Each finished unit requires 0.50 hours of direct labor at a rate of $23 per hour e. Overhead is allocated based on direct labor hours. The predetermined variable overhead rate is $3.40 per direct labor hour. Depreciation of $27,020 per month is treated as fixed factory overhead. f. Sales representatives' commissions are 7% of sales and are paid in the month of the sales. The sales managers monthly salary is $3,800 g. Monthly general and administrative expenses include $20,000 administrative salaries and 0.5% monthly interest on the long-term note payable h. The company expects 25% of sales to be for cash and the remaining 75% 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 purchases are fully paid in the next mont J. The minimum ending cash balance for all months is $48.000. It necessary, the company borrows enough cash using a short-term 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 $18,000 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 $138,000 are budgeted tor the last day of June Required Prepare the following budgets and other financial information as required. All budgets and other financial information should be prepared for the second calendar quarter, except as otherwise noted below (Round calculations up to the nearest whole dollar, except for the amount of cash sales, which should be rounded down to the nearest whole dollar.) 1. Sales budget 2. Production budget. 3. Raw materials budget 4. Direct labor budget 5. Factory overhead budget 6. Selling expense budget. 7. General and administrative expense budget 9. Budgeted income statement for the entire second quarter (not for each month separately)

Answer 1

General and Administrative expenses budgets

April May and June 2017

	April	May	June
salaries	20000	20000	20000
Interest on long term notes	2540	2540	2540
Total budget	22540	22540	22540

calculation of cash receipt from customers

		April	May	June
Total budget sale		585000	513000	639000
Cash sale	25%	146250	128250	159750
sale on credits	75%	438750	438750	384750

Total cash receipt from customers

	april	may	june
current month's cash sale	146250	128250	159750
collection of receivable	438750	438750	384750
total	585000	567000	544500

raw material budget

	april	may	june	total
production budgets (units)	17580	20460	19860
raw material required per unit	.5	.5	.5
materila total required	8790	10230	9930
material at end	5115	4965	4800
total material	13905	15195	14730
material at beginning	4395	5115	4965
material purchased	9510	10080	9765
material price per unit	20	20	20
budget raw material	190200	201600	195300