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Problem 7-4A Manufacturing: Preparation of a complete master budget LO P1, P2, P3 The management of Zigby Manufacturing prepared the following estimated balance sheet for March 2017: BOON Pint LIGSY MANUFACTURING Estimated Balance Sheet March 31, 2017 Assets Cash Accounts receivable Raw materials Inventory Tinished goods inventory Total current assets Equipment, gros Accumulated depreciation Equipment, het Total assets Liabilities and Equity hocante payable Short term notee payable Total current liabilities Long-ter note payable Total ILILLE Les Con stock Detained earnings Total stockholders equity Total liabilities and equity 40,000 342,248 98.500 325,540 806,288 600.000 (150.000) 450.000 $1,256,288 $ 200,500 12.000 212.500 S00.000 712.500 335.000 208, 788 5413 31,256,20 To prepare master budget for Apr May, and June of 2017, management others the following information yos Bool Print a. Sales for Morch total 20,500 units. Forecasted soles in units are as follows: April, 20,500, May 19,500; June, 20,000, and July, 20,500. Sales of 240,000 units are forecasted for the entire year. The product's selling price is $23.85 per unit and its total product cost is $19.85 per unit b. Company policy calls for a given month's ending raw materials inventory to equal 50% of the next month's materiais requirements The March 31 raw materials inventory is 4.925 units, which complies with the polley. The expected June 30 ending raw materiais Inventory is 4,000 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 unt sales. The March 31 finished goods inventory is 16,400 units, which complies with the policy d. Each finished unit requires 0.50 hours of direct labor at a rate of $15 per hour e Overhead is allocated based on direct labor hours. The predetermined variable overhead rate is $2.70 per direct labor hout Depreciation of $20,000 per month is treated as fixed factory overhead 1. Sales representatives commissions are 8% of sales and are paid in the month of the soles. The sales manager's monthly salary is $3,000 9. Monthly general and administrative expenses include $12,000 administrative salaries and 0.9% 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). 1. 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 $40,000. 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 of the ending cash balance exceeds the minimum, the excess will be applied to repaying the short-term notes payable balance k. Dividends of $10,000 are to be declared and paid in May. L. 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. m. Equipment purchases of $130,000 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. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Required 5 Required 6 Required 7 Required 8. Required 9 Required 10 Sales budget ZIGBY MANUFACTURING Sales Budget April, May, and June 2017 Budgeted Budgeted Budgeted Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Required 5 Required 6 Required 7 Required 8 Required 9 Production budget. k Production Budget April, May, and June 2017 April May 19,500 20,000 80% 80% June 20,500 Next month's budgeted sales (units) Ratio of inventory to future sales 80% Required units of available production Units to be produced Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Required 5 Required 6 Required 7 Required 8 Required 9 Raw materials budget ook ZIGBY MANUFACTURING int Raw Materials Budget April, May, and June 2017 April May June Production budget (units) Materials needed for production Total materials requirements (units) Materials to be purchased Material price per unit Budgeted raw material purchases Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Required 5 Required 6 Required 7 Required 8 Required Direct labor budget. Book Print ZIGBY MANUFACTURING Direct Labor Budget April, May, and June 2017 April May June Total Budgeted production (units) Total labor hours needed Budgeted direct labor cost 1 Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Required 5 Required 6 Required 7 Required 8 Required 9 Reu Factory overhead budget. Book Print ZIGBY MANUFACTURING Factory Overhead Budget April, May, and June 2017 April May June Total Labor hours needed Budgeted variable overhead Budgeted fixed overhead Budgeted total overhead Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Required 5 Required 6 Required 7 Required 8 Required 9 R Selling expense budget. ZIGBY MANUFACTURING Selling Expense Budget April, May, and June 2017 April May June Budgeted sales Sales commissions Complete this question by entering your answers in the tabs below. LLLLLL Required 1 Required 2 Required 3 Required 4 Required 5 Required 6 Requird 7 Required 8 Required 9 Re General and administrative expense budget. ZIGBY MANUFACTURING General and Administrative Expense Budgets April, May, and June 2017 April May June Total budgeted G&A expenses Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Required 5 Required 6 Required 7 Required 8 Required 9 Re Cash budget. (Negative balances and Loan repayment amounts (if any) should be indicated with minus sign.) Calculation of Cash receipts from customers: April May June Total budgeted sales Cash sales Sales on credit 30% 70% Total cash receipts from customers Current month's cash sales Collections of receivables Total cash receipts ZIGBY MANUFACTURING Cash Budget April, May, and June 2017 April May June Beginning cash balance Cash Budget April, May, and June 2017 April May June Beginning cash balance Total cash available Cash payments for: Total cash payments Preliminary cash balance Ending cash balance Total cash payments Preliminary cash balance Ending cash balance Loan balance April May June Loan balance - Beginning of month Additional loan (loan repayment) Loan balance - End of month vuuyucu TITTC DLOUCHCHILIUI LIIC CHILIC OCHIU YUGILCI (POL TUI COCHIILIT CPI OLIY nearest whole dollar.) ZIGBY MANUFACTURING Budgeted Income Statement For Three Months Ended June 30, 2017 Operating expenses Total operating expenses ZIGBY MANUFACTURING Budgeted Balance Sheet June 30, 2017 Assets Total current assets Equipment, net Total assets Liabilities and Equity Liabilities Total current liabilities Stockholders' Equity Drau Total current assets Equipment, net Total assets Liabilities and Equity Liabilities Total current liabilities Stockholders' Equity Total Stockholders' Equity Total Liabilities and Equity