Question

The management of Zigby Manufacturing prepared the following estimated balance sheet for March 2019

ZIGBY MANUFACTURING Estimated Balance Sheet March 31 points 2019 Assets Cash 80,000 364,000 96, 000 364,800 904, 800 610, 000 (155, 000) Accounts receivable Raw materials inventory Finished goods inventory eBook Total current assets Equipment Accumulated depreciation Equipment, net Print 455, 000 $1,359, 800 Total assets Liabilities and Equity 195,500 17,000 212,500 Accounts payable Short-term notes payable Total current liabilities S10,000 722, 500 340, 000 297,300 637,300 Long-term note payable Total liabilities Common stock Retained earnings Total stockholders equity Total liabilities and equity$1,359, 800 and June of 2019. management gathers the fo To prepare a master budget for April, May foilowr: Anril 20.00 10

1. Sales for March total 20,000 units. Forecasted sales in units are as follows: April, 20,000; May, 19,000; June, 19,500; and July, 20,000. Sales of 245,000 units are forecasted for the entire year. The product’s selling price is $26.00 per unit and its total product cost is $22.80 per unit.
2. 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 4,800 units, which complies with the policy. The expected June 30 ending raw materials inventory is 4,500 units. Raw materials cost $20 per unit. Each finished unit requires 0.50 units of raw materials.
3. 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 16,000 units, which complies with the policy.
4. Each finished unit requires 0.50 hours of direct labor at a rate of $20 per hour.
5. Overhead is allocated based on direct labor hours. The predetermined variable overhead rate is $3.20 per direct labor hour. Depreciation of $23,400 per month is treated as fixed factory overhead.
6. Sales representatives’ commissions are 6% of sales and are paid in the month of the sales. The sales manager’s monthly salary is $3,500.
7. Monthly general and administrative expenses include $17,000 administrative salaries and 0.9% monthly interest on the long-term note payable.
8. The company expects 30% of sales to be for cash and the remaining 70% on credit. Receivables are collected in full in the month following the sale (none are collected in the month of the sale).
9. 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 month.
10. The minimum ending cash balance for all months is $45,000. If 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.
11. Dividends of $15,000 are to be declared and paid in May.
12. No cash payments for income taxes are to be made during the second calendar quarter. Income tax will be assessed at 35% in the quarter and paid in the third calendar quarter.
13. Equipment purchases of $135,000 are budgeted for 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.):

9. Budgeted income statement for the entire second quarter (not for each month separately).
10. Budgeted balance sheet.

Answer 1

ANSWER:

As per given Question

Solution 1: ZIGBY MANUFACTURING Sales Budget April, May, and June 2019 Budgeted Unit Sales Budgeted Unit Price Budgeted Sales Dollars Apr-19 20000 $520,000.00 S494,000.00 May-19 $26.00 $26.00 $26.00 19000 19500 Jun-19 S507,000.00 Totals for the second quarter 58500 $26.00 $1,521,000.00

Solution 2: ZIGBY MANUFACTURING Production Budget Aprill, May, and June 2019 April May June Next month's budgeted sales (units) units 19000 19500 20000 Ratio of inventory to future sales 8096 8096 8096 Desired ending inventory 15200 15600 16000 Budgeted sales units 20000 19000 19500 Required units of available production 35200 34600 35500 Beginning inventory 16000 15200 15600 Units to be produced 19200 19400 19900

Solution 3: ZIGBY MANUFACTURING Raw Materials Budget April, May, and June 2019 April May June Production budget (units) 19200 19400 19900 Raw material per unit 0.5 0.5 Materials needed for eded for 9600 production 9700 9950 Desired ending inventory 4850 4975 4500 Total materials requirements (units) 14450 14675 14450 Beginning inventory 4800 4850 4975 Materials to be purchased 9650 9825 9475 Material price per unit $20.00 $20.00 $20.00 Budgeted raw material purchases $193,000.00 $196,500.00 $189,500.00

Solution 4: ZIGBY MANUFACTURING Direct Labor Budget April, May, and June 2019 April May June Total Budgeted production (units) 19200 19400 19900 58500 Direct labor hour per unit 0.5 0.5 0.5 05 Total labor hours needed 9600 9700 9950 29250 Direct labor rate per hour $20.00 $20.00 $20.00 $20.00 Budgeted direct labor cost $192.000.00 $194,000.00 $199,000.00 $585,000.00

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