Question

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 46,000 386,925 96, 290 327,831 857,046 612,000 (156,000) 456,000 $1,313,046 $ 196,190 18,000 214,190 506,000 720,190 341,000 251,856 592,856 $1,313,046 To prepare a master budget for April, May, and June of 2019, management gathers the following information.

Answer 1

June Zigby Manufacturing Sales Budget Req 1 Sales (Units) Selling price per unit Total budgeted sales April 20,100 27.50 552,750 May 18,900 27.50 519,750 June 19,700 27.50 541,750 Calculation Quarter April May 58,700 27.50 1,614,250 Sales (units)* Selling price per unit Quarter April May June Production budget Req2 Budgeted Next Months Sales (Units) Ratio of inventory to future sales Budgeted Ending Inventory (Units) Budgeted Sales (Units) Inventory Needed Less Beginning Inventory Required Production (Units) Budgeted Next Months Sales (Units) * 70% April 18,900 70% 13,230 20,100 33,330 14,070 19,260 May 19,700 70% 13,790 18,900 32,690 13,230 19,460 June 20,100 70% 14,070 19,700 33,770 13,790 19,980 14,070 58,700 72,770 14,070 58,700 End Inv of Apr End Inv of May Raw Materials budget Req3 Required Production (Units) Materials required per unit Raw Material Required Add Ending Inventory Raw Materials Needed Less Beginning Inventory Raw Material Purchased Raw Material Cost per unit Budgeted Raw Material Cost April 19,260 0.50 9,630 4,865 14,495 4,815 9,680 20 193,600 May 19,460 0.50 9,730 4,995 14,725 4,865 9,860 June 19,980 0.50 9,990 4,600 14,590 4,995 9,595 20 191,900 Quarter April May June 58,700 0.50 29,350 Required Production (Units) * 0.50 4,600 Next Months Raw Material Required * 50% 33,950 4,815 End Inv of Apr End Inv of May 29,135 20 582,700 Raw Material Purchased * Raw Material Cost per unit 20 193,500 197,200 11,900 $2.700 197,200 April May June Direct labor budget Req4 Required Production (Units) Labor requirements per unit Total Labor hours needed Direct labor rate per hour Budgeted Direct Labor Cost April May 19,260 19,460 0.50 0.50 9,630 9,730 21 202,230 204,330 June 19,980 0.50 9,990 21 209,790 Quarter 58,700 0.50 29,350 Required Production (Units) * 0.50 21 202,230 209,330 209,730 66,330 616,350 Total Labor hours needed * Direct labor rate per hour April May June Factory Overhead budget Req5 Labor hours needed Variable factory overhead rate Budgeted Variable factory overhead Budgeted Fixed factory overhead Budgeted total factory overhead April 9,630 3.00 28,890 25,440 54,330 May 9,730 3.00 29,190 25,440 54,630 June 9,990 3.00 29,970 25,440 55,410 Quarter 29,350 3.00 88,050 76,320 164,370 Labor hours needed * Variable factory overhead rate April May June Selling Expenses Budget Reg 6 Budgeted sales Sales commission percent Sales commission Sales salaries Total budgeted selling expenses May 519,750 6% June 541,750 6% April 552,750 6% 33,165 3,600 36,765 Quarter 1,614,250 6% 96,855 10,800 107,655 Budgeted sales *6% 3,600 34,785 3,600 36,105 April May June General & Admin Expenses Budget Req7 Salaries Interest on long term note Total budgeted General & Admin expenses April 18,000 2,530 20,530 May 18,000 2,530 20,530 June 18,000 2,530 20,530 Quarter 54,000 7,590 61,590 +506,000*0.5% =506,000*0.5% =506,000*0.5%

May June Schedule of cash receipts Req 8A Cash sales Credit sales Total cash collections April May 165,825 155,925 386,925 363,825 552,750 519,750 June 162,525 379,225 541,750 Quarter 484,275 1,129,975 1,614,250 April Budgeted sales * 30% Budgeted sales * 70% April May June Schedule of cash receipts Req 8B Current Months Cash sales Collections of receivables Total cash collections April 165,825 386,925 552,750 May 155,925 386,925 542,850 June 162,525 363,825 526,350 Quarter 484,275 1,137,675 1,621,950 April May June April 46,000 552,750 598,750 May 95,965 542,850 638,815 June 140,380 526,350 666,730 Quarter 46,000 1,621,950 1,667,950 Cash budget Req8 Cash balance, beginning Cash receipts from customers Total cash available Less Cash payments for Raw materials Direct labor Variable overhead Sales commissions Sales salaries General & admin salaries Dividends Loan interest Long term note interest Purchase of equipment Taxes paid Total cash payments Preliminary cash balance Additional loan (loan repayments) Ending Cash balance 196,190 202,230 28,890 33,165 3,600 18,000 193,600 204,330 29,190 31,185 3,600 18,000 16,000 197,200 209,790 29,970 32,505 3,600 18,000 586,990 616,350 88,050 96,855 10,800 54,000 16,000 180 7,590 136,000 =18,000*1% 180 2,530 2,530 2,530 136,000 498,435 140,380 484,785 113,965 (18,000) 95,965 629,595 37,135 8,865 46,000 1,612,815 55,135 (9,135) 46,000 -46,000-37,135 140,380 April Loan Balance Loan Balance - Beginning of Month Additional loan (loan repayments) Loan Balance - End of Month May 18,000 (18,000) June - 8,865 8,865 Quarter 18,000 (9,135) 8,865

1,614,250 1,367,710 246,540 Calculation =58,700*27.50 =58,700*23.30 Income Statement Req9 Sales Cost of goods sold Gross Profit Operating expenses Sales Commissions Sales Salaries General Administrative Salaries Interest on short term note payable Interest on long term note payable Total Operating expenses Income before taxes Income tax expense Net Income 96,855 10,800 54,000 180 7,590 =18,000*1% =506,000*0.5%*3 169,425 77,115 30,846 46,269 =77,115*40% Balance Sheet Req 10 Assets Cash Accounts Receivable Raw Material Inventory Finished goods Inventory Total Current Assets Equipment, gross Accumulated Depreciation Equipment, net Total Assets 46,000 379,225 92,000 327,831 =541,750*70% --4,600*20 =14,070*23.30 845,056 748,000 (232,320) =612,000+136,000 =156,000+25,440*3 515,680 1,360,736 191,900 8,865 30,846 From Cash budget From Income Statement Liabilities & Stockholders Equity Current Liabilties Accounts Payable Short term notes payable Income taxes Payable Total Current Liabilties Long term notes payable Stockholders Equity Common Stock Retained Earnings Total Stockholders Equity Total Liabilities & Stockholders Equity 231,611 506,000 341,000 282,125 =251,856+46,269-16,000 623,125 1,360,736