10 10 The management of Zigby Manufacturing prepared the following balance sheet for March 31. 6 points Cash Accounts receivable Raw materials inventory Assets ZIGBY MANUFACTURING Balance Sheet March 31 Liabilities Accounts payable $ 58,000 440,370 91,300 Loan payable Finished goods inventory 393,304 Long-term note payable Equipment Less: Accumulated depreciation $ 636,000 168,000 Equity 468,000 Common stock Liabilities and Equity $ 206,400 30,000 500,000 353,000 Total assets $ 736,400 Retained earnings $1,450,974 Total liabilities and equity To prepare a master budget for April, May, and June, management gathers the following information. 361,574 714,574 $1,450,974 a. Sales for March total 23,300 units. Budgeted sales in units follow: April, 23,300; May, 17,000; June, 21,900; and July, 23,300. The product's selling price is $27.00 per unit and its total product cost is $21.10 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 4,565 pounds. The budgeted June 30 ending raw materials inventory is 5,800 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 18,640 units. d. Each finished unit requires 0.50 hour of direct labor at a rate of $14 per hour. e. The predetermined variable overhead rate is $4.50 per direct labor hour. Depreciation of $38,357 per month is the only fixed factory overhead item. f. Sales commissions of 10% of sales 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 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). 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 $58,000. 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 $28,000 are budgeted to be declared and paid in May. I. 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. 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. 10 Budgeted balance sheet at June 30. (Round your final answers to the nearest whole dollar.) ZIGBY MANUFACTURING Budgeted Balance Sheet June 30 6 points Cash Accounts receivable Assets $ 123,870 ( 413,910 Raw materials inventory 116,000 Finished goods inventory 393,304 $ 0 0 0 Total assets Liabilities Accounts payable Equity Liabilities and Equity $ 231,100 Common stock 353,000 Retained earnings 387,095 Total Liabilities and Equity $ 971,195 10 Cash Budget April May June 6 Beginning cash balance $ 58,000 $ 179,785 $ 255,745 points Add: Cash receipts from sales 629,100 578,070 498,690 Total cash available Less: Cash payments for: 687,100 757,855 754,435 Direct material 206,400 195,900 219,700 Direct labor 127,820 146,440 161,140 Variable overhead 41,085 47,070 51,795 Sales salaries 67,710 x 50,700 x 63,930 x General and administrative salaries 34,000 x 34,000 34,000 Dividends 0 28,000 0 Loan interest 300 0 Purchases of equipment 0 0 100,000 Total cash payments 477,315 502,110 630,565 Preliminary cash balance 209,785 255,745 123,870 Additional loan (loan repayment) (30,000) 0 0 Ending cash balance $ 179,785 $ 255,745 $ 123,870