apter 20 Homework Saved 1 Problem 20-4A (Algo) Manufacturing: Preparation of a complete master budget LO P1, P2, P3 The management of Zigby Manufacturing prepared the following balance sheet for March 31. Assets ZIGBY MANUFACTURING Balance Sheet March 31 Liabilities Accounts payable Liabilities and Equity nts Cash $ 69,000 Accounts receivable 390,600 $ 178,700 Raw materials inventory 86,000 Loan payable eBook Finished goods inventory Equipment 348,480 Long-term note payable 19,000 500,000 $ 697,700 Print Less: Accumulated depreciation $ 614,000 157,000 Equity 457,000 Common stock Retained earnings 342,000 311,380 eferences Total assets $ 1,351,080 Total liabilities and equity 653,380 $ 1,351,080 To prepare a master budget for April, May, and June, management gathers the following information. a. Sales for March total 18.000 units. Budgeted sales in units follow: April, 18,000; May, 17,000; June. 20,700; and July, 18,000. The product's selling price is $31.00 per unit and its total product cost is $24.20 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 4,300 pounds. The budgeted June 30 ending raw materials inventory is 4,700 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 14.400 units. d. Each finished unit requires 0.50 hour of direct labor at a rate of $22 per hour. e. The predetermined variable overhead rate is $3.40 per direct labor hour. Depreciation of $27,850 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 $3,700. Saved 20 Homework i ok nt nces g. Monthly general and administrative expenses include $19,000 for administrative salaries and 0.6% 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 $69,000. If necessary, the company borrows enough cash using a loan to reac 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 $17,000 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 quarte land 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. Complete this question by entering your answers in the tabs below. Req 1 Reg 2 Req 3 Req 4 Req 5 Req 6 Req 7 Req 8 to Sales budget. ZIGBY MANUFACTURING Sales Budgets April May June Budgeted sales units 18.000 $ 17.000 $ 20.700 Selling price per unit 5 31.00 S 31.00 $ 31.00 Total budgeted sales $ 558,000 $ 527.000 5 641.700 Reg 2 > Production budget. Budgeted sales units Add: Desired ending inventory Req 4 Req S Req 6 Req/ Req 8 to 1 ZIGBY MANUFACTURING Production Budget April May June Total 18,000 17,000 20,700 Next period budgeted sales units 17,000 20,700 18,000 Ratio of inventory to future sales 80% 80% 80% Desired ending inventory units 13,600 16,560 14,400 Total required units 31,600 33,560 35,100 Less: Beginning inventory units 14,400 13,600 16,560 Units to produce 17,200 19,960 18,540 55.700 < Req 1 Req 3 > Req 1 Reg 2 Req 3 Req 4 Req 5 Req 6 Req 7 Req 8 to 10 Req 11 Direct materials budget. (Round per unit values to 2 decimal places.) ZIGBY MANUFACTURING Direct Materials Budget April May June Total Units to produce 17,200 19,960 18,540 Materials required per unit (pounds) 0.50 0.50 0.50 Materials needed for production (pounds) 8,600 9,980 9,270 Add: Desired ending inventory 4,990 4,635 4.700 Total materials required (pounds) 13,590 14,615 13,970 Less: Beginning materials inventory 4,300 4,990 4.635 Materials to purchase (pounds) 9,290 9.625 9.335 28.250 Materials cost per pound S 20 S 20 $ 20 S 20 Cost of direct materials purchases S 185.800 192.500 $ 186.700 S 565.000 Req 2 Req 4 Req 1 Req 2 Req 3 Req 4 Reg 5 Req 6 Req 7 Req 8 to 10 Direct labor budget. (Round per unit values to 2 decimal places.) Units to produce Direct labor hours required per unit Direct labor hours needed Direct labor cost per hour Cost of direct labor ZIGBY MANUFACTURING Direct Labor Budget April May June Total 17,200 19,960 18.540 0.50 0.50 0.50 8,600 9,980 9.270 27.850 $ 22 $ 22 $ 22 $ 22 $ 189,200 $ 219,560 5 203.940 $ 612.700 Req 3 Req 5 > Complete this question by entering your answers in the tabs below. Req 1 Req 2 Req 3 Req 4 Reg 5 Req 6 Reg 7. Reg 8 to 10 R Factory overhead budget. (Round variable overhead rate values to 2 decimal places.) ZIGBY MANUFACTURING Factory Overhead Budget April May June Total Direct labor hours needed 8.600 9.980 9.270 Variable overhead rate per direct labor hour $ 3.40 LO 3.40 S CO 3.40 Budgeted variable overhead $ 29.240 $ 33.932 B 31,518 $ 94,690 Budgeted fixed overhead 27.850 27.850 27.850 83,550 Budgeted total factory overhead S 57.090 S 61.782 $ 59.368 $ 178,240 Req 4 Req 6 Homework i Complete this question by entering your answers in the tabs below. Saved Req 1 Req 2 Req 3 Req 4 Req 5 Req 6 Req 7 Req 8 to 10 Req Selling expense budget. ZIGBY MANUFACTURING Selling Expense Budget April May June Budgeted sales S 44,640 $ 42,160 $ Sales commission percent 8% 8% 51.336 8% Sales commissions Sales salaries Total selling expenses 3.700 3.700 3,700 11,100 Complete this question by entering your answers in the tabs below. Req 1 Req 2 Req 3 Req 4 Req 5 Req 6 Req 7 Req 8 to 10 Req 11 Rec General and administrative expense budget. ZIGBY MANUFACTURING General and Administrative Expense Budget April May June Total general and administrative expenses Complete this question by entering your answers in the tabs below. Saved Req 1 Req 2. Req 3 Req 4 Req 5 Req 6 Req 7. Req 8 to 10 Req 11 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.) Sales Cash receipts from Cash sales Collections of prior period sales Total cash receipts ZIBGY MANUFACTURING Schedule of Cash Receipts April May June S 558,000 S 527,000 $ 641,700 $ $ 0 S 0 Schedule of Cash Payments for Direct Materials Materials purchases Cash payments for Current period purchases Dring narind nurchacan to search April May June $ 185.800 S 192.500 S 186,700 1 of 1 Next er 20 Homework Schedule of Cash Payments for Direct Materials Materials purchases Cash payments for Current period purchases Prior period purchases Total cash payments Saved April May June $ 185,800 $ 192,500 $ 186,700 $ 0 $ 0 S 0 Cash Budget Cook April May June Print erences Beginning cash balance Total cash available Less: Cash payments for: Total cash payments Preliminary cash balance Ending cash balance Loan balance-Beginning of month Additional loan (loan repayment Loan balance - End of month 0 0 0 Loan balance April May June S 0 Req 11 es Budgeted income statement for entire second quarter (not monthly). (ko ZIGBY MANUFACTURING Budgeted Income Statement For Three Months Ended June 30 ma Selling, general and administrative expenses Total operating expenses Req 8 to 10 0 0 S 0 Req 12 > Prev of Ne Saved Homework Budgeted balance sheet at June 30. (Round your final answers to the nearest whole dollar.) ZIGBY MANUFACTURING Budgeted Balance Sheet June 30 Assets Total assets Liabilities and Equity Liabilities Equity Total Liabilities and Equity Req 11 0