1 Problem 7-4A (Algo) Manufacturing: Preparation of a complete master budget LO P1, P2, P3 15 points eBook The management of Zigby Manufacturing prepared the following balance sheet for March 31. ZIGBY MANUFACTURING Balance Sheet March 31 Assets Liabilities and Equity Cash $ 59, eee Liabilities Accounts receivable 455,980 Accounts payable Raw materials inventory 93,000 Loan payable Finished goods inventory 433,eee Long-term note payable Equipment $ 638,00 Equity Less: Accumulated depreciation 169,690 469, eee Common stock Retained earnings Total assets $ 1,589,880 Total liabilities and equity To prepare a master budget for April, May, and June, management gathers the following information. $ 215,400 31,800 500,00 $ 746,480 Print 354,800 488,600 762,689 $ 1,509, eee References .. Sales for March total 25.000 units. Budgeted sales in units follow: April. 25.000: May, 17,000: June, 22.400: and July, 25.000. The product's selling price is $26.00 per unit and its total product cost is $21.65 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 4.650 pounds. The budgeted June 30 ending raw materials inventory is 5,900 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 20,000 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 $4.60 per direct labor hour. Depreciation of $39,713 per month is the only fixed factory overhead item. f. Sales commissions of 5% of sales are paid in the month of the sales. The sales manager's monthly salary is $4.900. 9. Monthly general and administrative expenses include $34.000 for administrative salaries and 0.8% 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). 1 15 points 1. 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 $59.000. 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 $29.000 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. eBook Print References Required: Prepare the following budgets for the months of April, May, and June: 1. Sales budget. 2. Production budget. 3. Direct materials budget. 4. Direct labor budget. 5. Factory overhead budget. 6. Selling expense budget. 7. General and administrative expense budget. 8. Schedule of cash receipts. 9. Schedule of cash payments for direct materials. 10. Cash budget. 11. Budgeted income statement for entire second quarter (not monthly). 12. Budgeted balance sheet at June 30. Complete this question by entering your answers in the tabs below. 1 Complete this question by entering your answers in the tabs below. 15 points Req1 Reg 2 Reg 3 Reg 4 Reg 5 Reg 6 Reg 7 Reg 8 to 10 Reg 11 Reg 12 Production budget ZIGBY MANUFACTURING eBook Production Budget Total April 25,000 May 17.000 June 22,400 Print 22,400 25,000 References Budgeted sales units Calculation of desired ending inventory Next period budgeted sales units Ratio of inventory to future sales Less: Beginning inventory units Total required units 17,000 80% 80% 80% Units to produce 1 Complete this question by entering your answers in the tabs below. 15 points Req 1 Reg 2 Reg 3 Reg 4 Reg 5 Reg 6 Reg 7 Reg 8 to 10 Reg 11 Reg 12 Raw materials budget. (Round per unit values to 2 decimal places.) eBook ZIGBY MANUFACTURING Direct Materials Budget April May June Print Units to produce References Materials needed for production (pounds) Total materials required (pounds) Materials to purchase (pounds) Materials cost per pound Cost of direct materials purchases 1 7. General and administrative expense budget. 8. Schedule of cash receipts. 9. Schedule of cash payments for direct materials. 10. Cash budget. 11. Budgeted income statement for entire second quarter (not monthly). 12. Budgeted balance sheet at June 30. 15 points Complete this question by entering your answers in the tabs below. eBook Req 1 Reg 2 Reg 3 Reg 4 Req5 Reg 6 Reg 7 Reg 8 to 10 Reg 11 Reg 12 Print Direct labor budget. (Round per unit values to 2 decimal places.) ZIGBY MANUFACTURING Direct Labor Budget April May References June Total Units to produce Direct labor hours needed 0 Cost of direct labor 1 7. General and administrative expense budget. 8. Schedule of cash receipts. 9. Schedule of cash payments for direct materials. 10. Cash budget. 11. Budgeted income statement for entire second quarter (not monthly). 12. Budgeted balance sheet at June 30. 15 points Complete this question by entering your answers in the tabs below. eBook Reg 1 Reg 2 Reg 3 Reg 4 Reg 5 Req6 Reg 7 Reg 8 to 10 Reg 11 Reg 12 Print Factory overhead budget. (Round variable overhead rate values to 2 decimal places.) References ZIGBY MANUFACTURING Factory Overhead Budget April May June Total Direct labor hours needed Variable overhead rate per direct labor hour Budgeted variable overhead Budgeted fixed overhead Budgeted total factory overhead 1 9. Schedule of casn payments for airect materiais. 10. Cash budget. 11. Budgeted income statement for entire second quarter (not monthly). 12. Budgeted balance sheet at June 30. 15 points Complete this question by entering your answers in the tabs below. Req 1 Reg 2 Reg 3 Reg 4 Reg 5 Reg 6 Reg 7 Reg 8 to 10 Reg 11 Reg 12 eBook Selling expense budget. Print ZIGBY MANUFACTURING Selling Expense Budget April May June References Budgeted sales Sales commissions 1 4. Direct labor budget. 3. Factory overhead budget. 6. Selling expense budget. 7. General and administrative expense budget. 8. Schedule of cash receipts. 9. Schedule of cash payments for direct materials. 10. Cash budget 11. Budgeted income statement for entire second quarter (not monthly). 12. Budgeted balance sheet at June 30. 15 points eBook Complete this question by entering your answers in the tabs below. Print Reg 1 Reg 2 Reg 3 Reg 4 Reg 5 Reg 6 Reg 7 Req 8 to 10 Reg 11 Reg 12 References General and administrative expense budget. ZIGBY MANUFACTURING General and Administrative Expense Budget April May June Total general and administrative expenses 1 11. Buagerea income statement for entire secona quarter (not montniy). 12. Budgeted balance sheet at June 30. Complete this question by entering your answers in the tabs below. 15 points Reg 1 Reg 2 Reg 3 Reg 4 Reg 5 Reg 6 Reg 7 Req 8 to 10 Reg 11 Reg 12 eBook 8. Schedule of cash receipts. 9. Schedule of cash payments for direct materials. 10. Cash budget (Negative balances and Loan repayment amounts (if any) should be indicated with minus sign.) Print Show less A References ZIBGY MANUFACTURING Schedule of Cash Receipts April s 650.000 May 442.000 June 582,400 $ S Sales Cash receipts from Cash sales Collections of prior period sales Total cash receipts $ 0 $ $ 0 June 240,400 $ Schedule of Cash Payments for Direct Materials April May Materials purchases s 199.600 $ 229.000 Cash payments for Current period purchases Prior period purchases Total cash payments s 0 $ $ 0 1 Cash Budget April May June Beginning cash balance 15 points Total cash available Less: Cash payments for eBook Print References 0 Total cash payments Preliminary cash balance Ending cash balance 1 15 points eBook 0 0 Total cash payments Preliminary cash balance Print Ending cash balance References Loan balance April May June Loan balance - Beginning of month Additional loan (loan repayment) Loan balance - End of month $ 0 1 11. Buagetea income statement for entire second quarter (not montniy). 12. Budgeted balance sheet at June 30. Complete this question by entering your answers in the tabs below. 15 points Reg 1 Reg 2 Reg 3 Reg 4 Reg 5 Reg 6 Reg 7 Reg 8 to 10 Reg 11 Reg 12 Budgeted income statement for entire second quarter (not monthly). (Round your final answers to the nearest whole dollar.) eBook ZIGBY MANUFACTURING Budgeted Income Statement For Three Months Ended June 30 Print References Selling, general and administrative expenses Total operating expenses 0 0 S 0 1 ZIGBY MANUFACTURING Budgeted Balance Sheet June 30 15 points Assets eBook Total current assets S 0 Print Equipment, net 0 References Total assets Liabilities and Equity Liabilities Bank loan payable 0 Total current liabilities Equity Total Equity Total Liabilities and Equity