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 Accounts receivable Raw materials inventory Finished goods inventory Total current assets Equipment, gross Accumulated depreciation Equipment, net Total assets 43,000 432,900 86,198 387,168 949,266 606,000 (153, 000) 453,000 $1,402,266 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 194,798 15,000 209,798 500,000 709,798 338,000 354,468 692,468 $1,402,266 Total liabilities and equity To prepare a master budget for April, May, and June of 2017, management gathers the following information

Answer 1

Solution:

Calculation of direct labor hours required

	April	May	June	Total
Next Month's Expected Unit Sales	16,000	19,800	22,200
Ratio of inventory to future sales	80%	80%	80%
Budgeted Finished Goods Ending Inventory (units)	12,800	15,840	17,760
Add: Budgeted Sales (units)	22,200	16,000	19,800
Required units of available production	35,000	31,840	37,560
Less: Budgeted Beginning Inventory (Ending Finished Goods Inventory of last month)	17,760	12,800	15,840
Units to be produced	17,240	19,040	21,720	58,000
Required Labor Hour Per unit	0.50	0.50	0.50
Total required direct labor hours	8,620	9,520	10,860	29,000

Part 5 – Factory Overhead Budget

Factory Overhead Budget
	April	May	June	Total
Total labor hours needed (refer working note)	8620	9520	10860
Variable Overhead Rate per Hour	$3	$3	$3
Budgeted Variable Overhead	$25,860	$28,560	$32,580
Budgeted Fixed Overhead	$25,134	$25,134	$25,134
Budgeted total overhead	$50,994	$53,694	$57,714	$162,402

Part 6 – Selling Expense Budget

Selling Expense Budget
	April	May	June	Total
Budgeted Sales	$577,200	$416,000	$514,800
% of Sales Commission over sales	9%	9%	9%
Sales Commission	$51,948	$37,440	$46,332	$135,720
Salary of Sales's Manager (Fixed)	$3,300	$3,300	$3,300	$9,900
Budgeted Total Selling Expense	$55,248	$40,740	$49,632	$145,620

Part 7 --

General and Administrative Expense Budget
	April	May	June	Total
Salaries	$15,000	$15,000	$15,000
Interest on long term note (0.6%*500,000)	$3,000	$3,000	$3,000
Total budgeted G&A Expense	$18,000	$18,000	$18,000	$54,000

Part 8 – Cash Budget

Calculation of Cash Receipts from Customers
	April	May	June
Total budgeted sales	$577,200	$416,000	$514,800
Cash Sales (25%)	$144,300	$104,000	$128,700
Sales on credit (75%)	$432,900	$312,000	$386,100
Total cash receipts from customers
Current month's cash sales	$144,300	$104,000	$128,700
Collections of receivables	$432,900	$432,900	$312,000
	$577,200	$536,900	$440,700

To prepare cash budget please provide production budget, raw material budget and labor budget since the value is directly related with these budgets.

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Pls ask separate question for remaining parts