Hello, in this assignment the goal is to create a master budget. Required 1-13 are all steps in the process of making one master budget, so it is only one question. Thank you.

Management expects December's results to be repeated in January, February, and March without any changes in strategy. Management, however, has an alternative plan. It believes that if the unit selling price is reduced to $125 per unit and advertising is increased to $287,500 per month, sales units will be 16,500 for January, 18,150 for February, and 19,965 for March. The cost of its product will remain at $75 per unit, the sales staff will continue to earn a 10% commission, and the remaining expenses will stay the same. Required 1. Prepare budgcted income statements for each of the months of January, February, and March that show results from implementing the proposed plan. Use a three-column format, with one column for each month. Ignore income taxes. Anglysis Componens 2. For the proposed plan, is income in March budgeted to be higher than income in December? The management of Zigby Manufacturing prepared the following balance sheet for March 31 . To prepare a master budget for April, May, and June, management gathers the following information. a. Sales for March total 20,500 units. Budgeted sales in units follow: April, 20,500; May, 19,500; June, 20,000 ; and July, 20,500 . The product's selling price is $24.00 per unit and its total product cost is $19.85 per unit. b. Raw materials inventory consists solely of direct materials that cost $20 per pound. Company policy calls for a given month's ending materials inventory to equal 50% of the next month's direct materials requirements. The March 31 raw materials inventory is 4,925 pounds. The budgeted June 30 ending raw materials inventory is 4,000 pounds. Each finished unit requires 0.50 pound of direct materials. c. Company policy calls for a given month's ending finished goods inventory to equal 80% of the next month's budgeted unit sales. The March 31 finished goods inventory is 16,400 units. d. Each finished unit requires 0.50 hour of direct labor at a rate of $15 per hour. e. The predetermined variable overhead rate is $2.70 per direct labor hour. Depreciation of $20,000 per month is the only fixed factory overhead item. f. Sales commissions of 8% of sales are paid in the month of the sales. The sales manager's monthly salary is $3,000. g. Monthly general and administrative expenses include $12,000 for administrative salaries and 0.9% monthly interest on the long-term note payable. h. The company budgets 30% of sales to be for cash and the remaining 70% on credit. Credit sales are collected in full in the month following the sale (no credit sales are collected in the month of sale). [continued from previous page] i. All raw materials purchases are on credit, and accounts payable are solely tied to raw materials purchases. Raw materials purchases are fully paid in the next month (none are paid in the month of purchase). j. The minimum ending cash balance for all months is $40,000. If necessary, the company borrows enough cash using a loan to reach the minimum. Loans require an interest payment of 1% at each month-end (before any repayment). If the month-end preliminary cash balance exceeds the minimum, the excess will be used to repay any loans. k. Dividends of $10,000 are budgeted to be declared and paid in May. 1. No cash payments for income taxes are budgeted in the second calendar quarter. Income tax will be assessed at 35% in the quarter and budgeted to be paid in the third calendar quarter. m. Equipment purchases of $100,000 are budgeted for the last day of June. \begin{tabular}{ll} \hline Problem 20-6 AA & Oneida Company's operations began in August. August sales were $215,000 and purchases were $125,000. \\ Merchandising: & The beginning cash balance for September is $5,000. Oneida's owner approaches the bank for a $100,000 \\ Preparation of cash & loan to be made on September 2 and repaid on November 30 . The bank's loan officer asks the owner to \\ budgets for three periods & prepare monthly cash budgets. Its budgeted sales, merchandise purchases, and cash payments for other ex- \\ P4 & penses for the next three months follow. \end{tabular} Management expects December's results to be repeated in January, February, and March without any changes in strategy. Management, however, has an alternative plan. It believes that if the unit selling price is reduced to $125 per unit and advertising is increased to $287,500 per month, sales units will be 16,500 for January, 18,150 for February, and 19,965 for March. The cost of its product will remain at $75 per unit, the sales staff will continue to earn a 10% commission, and the remaining expenses will stay the same. Required 1. Prepare budgcted income statements for each of the months of January, February, and March that show results from implementing the proposed plan. Use a three-column format, with one column for each month. Ignore income taxes. Anglysis Componens 2. For the proposed plan, is income in March budgeted to be higher than income in December? The management of Zigby Manufacturing prepared the following balance sheet for March 31 . To prepare a master budget for April, May, and June, management gathers the following information. a. Sales for March total 20,500 units. Budgeted sales in units follow: April, 20,500; May, 19,500; June, 20,000 ; and July, 20,500 . The product's selling price is $24.00 per unit and its total product cost is $19.85 per unit. b. Raw materials inventory consists solely of direct materials that cost $20 per pound. Company policy calls for a given month's ending materials inventory to equal 50% of the next month's direct materials requirements. The March 31 raw materials inventory is 4,925 pounds. The budgeted June 30 ending raw materials inventory is 4,000 pounds. Each finished unit requires 0.50 pound of direct materials. c. Company policy calls for a given month's ending finished goods inventory to equal 80% of the next month's budgeted unit sales. The March 31 finished goods inventory is 16,400 units. d. Each finished unit requires 0.50 hour of direct labor at a rate of $15 per hour. e. The predetermined variable overhead rate is $2.70 per direct labor hour. Depreciation of $20,000 per month is the only fixed factory overhead item. f. Sales commissions of 8% of sales are paid in the month of the sales. The sales manager's monthly salary is $3,000. g. Monthly general and administrative expenses include $12,000 for administrative salaries and 0.9% monthly interest on the long-term note payable. h. The company budgets 30% of sales to be for cash and the remaining 70% on credit. Credit sales are collected in full in the month following the sale (no credit sales are collected in the month of sale). [continued from previous page] i. All raw materials purchases are on credit, and accounts payable are solely tied to raw materials purchases. Raw materials purchases are fully paid in the next month (none are paid in the month of purchase). j. The minimum ending cash balance for all months is $40,000. If necessary, the company borrows enough cash using a loan to reach the minimum. Loans require an interest payment of 1% at each month-end (before any repayment). If the month-end preliminary cash balance exceeds the minimum, the excess will be used to repay any loans. k. Dividends of $10,000 are budgeted to be declared and paid in May. 1. No cash payments for income taxes are budgeted in the second calendar quarter. Income tax will be assessed at 35% in the quarter and budgeted to be paid in the third calendar quarter. m. Equipment purchases of $100,000 are budgeted for the last day of June. \begin{tabular}{ll} \hline Problem 20-6 AA & Oneida Company's operations began in August. August sales were $215,000 and purchases were $125,000. \\ Merchandising: & The beginning cash balance for September is $5,000. Oneida's owner approaches the bank for a $100,000 \\ Preparation of cash & loan to be made on September 2 and repaid on November 30 . The bank's loan officer asks the owner to \\ budgets for three periods & prepare monthly cash budgets. Its budgeted sales, merchandise purchases, and cash payments for other ex- \\ P4 & penses for the next three months follow. \end{tabular}