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 $ 42,000 Accounts receivable 364,000 Raw materials inventory 107,200 Finished goods 349,440 inventory Total current assets 862, 640 Equipment, gross 604,000 Accumulated (152,000) depreciation Equipment, net 452,000 Total assets $1,314,640 Liabilities and Equity Accounts payable $ 211,300 Short-term notes payable 14,000 Total current liabilities 225,300 Long-term note payable 510,000 Total liabilities 735,300 Common stock 337,000 Retained earnings 242,340 Total stockholders' equity 579,340 Total liabilities and $1,314,640 equity To prepare a master budget for April, May, and June of 2017, management gathers the following information: 6. Sales for March total 20,800 units. Forecasted sales in units are as follows: April, 20,800: May, 21,600: June, 20,900; and July, 20,800. Sales of 242,000 units are forecasted for the entire year. The product's selling price is $25.00 per unit and its total product cost is $21.00 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 5,360 units, which complies with the policy. The expected June 30 ending raw materials Inventory is 4,200 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 80% of the next month's expected unit sales. The March 31 finished goods Inventory is 16,640 units, which complies with the policy d. Each finished unit requires 0.50 hours of direct laborat a rate of $17 per hour e. Overhead is allocated based on direct labor hours. The predetermined variable overhead rate is $3.00 per direct labor hour. Depreciation of $21100 per month is treated as foxed factory overhead. Sales representatives' commissions are 8% of sales and are paid in the month of the sales. The sales manager's monthly salary is $3,200. g. Monthly general and administrative expenses include $14,000 administrative salaries and 0.7% monthly interest on the long-term note payable h. 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). 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 month The minimum ending cash balance for all months is $42,000. 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. k. Didends of $12.000 are to be declared and paid in May. 1. 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 $132.000 are budgeted for the last day of June.

Answer 1

Zigby Manufacturing

General and Administrative expenses budget

April,May,June 2017

	April	May	June	Total
Salaries	$14000	$14000	$14000	$42000
Interest on long term loans(long term note payables X interest rate=$510000 X 0.7℅=$3570)	$3570	$3570	$3570	$10710
Total General and Adminstration expenses	$17570	$17570	$17570	$52710