Question

The management of Zigby Manufacturing prepared the following estimated balance sheet for March 2017: ZIGBY MANUFACTURING Estimated Balance Sheet ch 31, 2017 Assets Cash S 58,000 484,640 91,290 393,304 Accounts receivable Raw materials inventory Finished goods inventory Total current assets 1,027,234 636,000 (168,000) Equipment, gross Accumulated depreciation Equipment, net 468,000 Total assets $1,495,234 Liabilities and Equity Accounts payable 206,390 30.000 payable -term no ities 236,390 525,000 otal Lonq-term note payable Total liabilities 761,390 353,000 380,844 733,844 Common stock Retained earnings Total stockholders' equity $1,495,234 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 23,300 units. Forecasted sales in units are as follows: April, 23,300; May, 17,000; June, 21,900; and July, 23,300. Sales of 258,000 units are forecasted for the entire year. The product's selling price is $26.00 per unit and its total product cost is $21.10 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 4,565 units, which complies with the policy. The expected June 30 ending raw materials inventory is 5,800 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 18,640 units, which complies with the policy. d. Each finished unit requires 0.50 hours of direct labor at a rate of $14 per hour. e. Overhead is allocated based on direct labor hours. The predetermined variable overhead rate is $4.50 per direct labor hour. Depreciation of $38,360 per month is treated as fixed factory overhead. f. Sales representatives' commissions are 10% of sales and are paid in the month of the sales. The sales manager's monthly salary is $4,800 g. Monthly general and administrative expenses include $30,000 administrative salaries and 0.8% monthly interest on the long-term note payable. 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 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. j. The minimum ending cash balance for all months is $58,000. 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. Dividends of $28,000 are to be declared and paid in May. . 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 $148,000 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.): 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. 8. Cash budget 9. Budgeted income statement for the entire second quarter (not for each month separately) 10. Budgeted balance sheet. Budgeted income statement for the entire second quarter (not for each month separately). (Round your final answers to the nearest whole dollar.) ZIGBY MANUFACTURING Budgeted Income Statement For Three Months Ended June 30, 2017 Operating expenses Total operating expenses 0 Budgeted balance sheet. (Round your final answers to the nearest whole dollar.) ZIGBY MANUFACTURING Budgeted Balance Sheet June 30, 2017 Assets Total current assets 0 Equipment, net 0 Total assets Liabilities and Equity Liabilities Total current liabilities Stockholders' Equity Total Stockholders' Equity Total Liabilities and Equity

Answer 1

1) ZIGBY MANUFACTURING Sales Budget April, May and June 2017 Sales price Projected Sales sales in units per unit revenue $26.00 $605,800 [23300 units x $26] April 2017 23,300 $26.00 $442,000 [17000 units x $26] 17,000 May 2017 $26.00 [21900 units x $26] June 2017 21,900 569,400 $26.00 $1,617,200 [62200 units x $26] Quarter 62,200 2) ZIGBY MANUFACTURING Production Budget April, May and June 2017 April Quarter May June 23,300 Projected sales in units 17,000 21,900 62,200 Add: Desired ending F.G 13,600 18,640 18,640 [Apr.-17,000x80%; May-21,900x80%; Jun.-23,300x80%] 17,520 Total F.G. inventory needed 36,900 34,520 40,540 80,840 Less: Beginning F.G. inventory Units to be produced -18,640 [Apr.-23,300x80%; May-17,000x80%; Jun.-21,900x80%] -18,640 -13,600 -17,520 18,260 20,920 23,020 62,200

3) ZIGBY MANUFACTURING Direct Materials Purchase Budget April, May and June 2017 April May June Quarter Units to be produced 62,200 (u) [As calculated in Requirement-2] 0.50--(v) 31,100 (u) x (v) 18,260 20,920 23,020 Materials required per unit Materials needed in production Add: Desired ending inventory 0.50 0.50 0.50 9,130 10,460 11,510 5,800 5,800 [Apr.-10,460x50%; May=11,510x50%; Jun.= Given] 5,230 5,755 Material needed in inventory 14,360 16,215 17,310 36,900 -4,565 [Apr.-9,130x50%; May 10,460x50%; Jun.-11,510x50% Deduct: Beginning inventory -4,565 -5,230 -5,755 D.M. to be purchased 10,985 32,335 -(c) 9,795 11,555 Cost per unit of material Cost of D.M. to be purchased $20 $20 $20 $20>(d) $646,700 >(c) x (d) [Here, D.M. --> Direct Materials] $195,900 $219,700 $231,100 4) ZIGBY MANUFACTURING Direct Labor Budget April, May and June 2017 April May June Quarter Units to be produced 20,920 62,200 >(u) [As calculated in Requirement-2] 18,260 23,020 --> Direct labor hours per unit Total D.L. hours needed in prod. 0.50 > (v) [30 mins. 0.50 hours] 0.50 0.50 0.50 31,100 -(w) = (u) x (v) $14 9,130 10,460 11,510 [Here, D.L. --> Direct Labor] $14 $14 $14 Labor rate per hour (h) $435,400>(w) x (h) $127,820 $146,440 $161,140 Direct labor cost