Help with 10 A
10) Connect gives a "total product cost" per unit that is used to calculate the ending inventory value and cost of goods sold. This per unit cost includes fixed overhead costs assuming the quarter's original production and sales levels. This average will change because of the one-time sale. Zigby Manufacturing uses weighted average costing for its inventory. Because Zigby does not have any Work-In-Process inventory, we can assume that all production costs flow to finished goods and then to cost of goods sold. a) Follow the directions below the table to calculate the revised weighted average cost per unit. ZIGBY MANUFACTURING Weighted Average Cost per Finished Goods Inventory Costs: March 31 Finished Goods Inventory (connect) 349,440 Raw Material used in production (calculated in 9) 715,026 Budgeted Direct Labor costs (calculated in 4 including wage premium) 739,770 Budgeted Overhead Costs (calculated in 5.Both variable and fixed) 18, 120 Total Costs of Finished Goods available for use sale (a) Units: Units in 3/31 Finished Goods Inventory (connect] Units produced during quarter (from 2) Total units available for sale (b) Weighted-Average Cost per unit (a)/(b) show 2 decimalsZIGBY MANUFACTURING Weighted Average Cost per Raw Material unit Costs March 31 Raw Material Balance (connect) 107 200 Raw Material purchases (total from 3 net of discount) 607,826 Total Costs available for use in production (a) $715,026 Units: Units in 3/31 Raw Material inventory (connect) 5,360 Units purchased during quarter (from 3) 30 490 Total units available for production (b) 35,850 Weighted-Average Cost per unit (a)/(b) show 2 decimals $19.94 b) Use the weighted average cost per unit to calculate the June 30 raw material inventory balance and the cost of direct material used in production. Use the notes below the table for assistance ZIGBY MANUFACTURING Raw Material Inventory Allocation of Costs Inventory at Used in Total 6/30 Production Accounted for Units 4,200 10.410 14 610 Weighted-average cost per unit $19.94 $19.94 $19.94 Allocated costs $83 748 $207 575.40 $291 323.40ZIGBY MANUFACTURING Estimated Balance Sheet March 31. 2019 Assets Cash $ 42,036 Accounts receivable 364,006 Raw materials inventory 167,286 Finished goods inventory 349,446 Total current assets 862,640 Equipment 604,006 Accumulated depreciation (152,086) Equipment, net 452,006 Total assets $1,314.540 Liabilities and Equity Accounts payable $ 211,386 Shortterm notes payable 14,006 Total current liabilities 225,386 Longterm note payable 510,086 Total liabilities 735,306 Common stock 337,006 Retained earnings 242,346 Total stockholders' equity 579,346 Total liabilities and equity $1,314,646 a. Sales for March total 20,800 units. Forecasted sales in units are as follows: April, 20,800; May, 21,600; June, 20,900; and July, 20,800. Sales of 242,000 units are forecasted for the entire year. The product's selling price is $25.00 per unit and its total product cost is $21.00 per unit. b. Company policy calls for a given month's ending raw materials inventory to equal 50% ofthe next month's materials requirements. The March 31 raw materials inventory is 5,360 units, which complies with the policy. The expected June 30 ending raw materials inventory is 4,200 units. Raw materials cost $20 per unit. Each nished unit requires 0.50 units of raw materials. c. Company policy calls for a given month's ending nished goods inventory to equal 80% of the next month's expected unit sales. The March 31 finished goods inventory is 16,640 units, which complies with the policy. d. Each finished unit requires 0.50 hours of direct labor at a rate of $17 per hour. e. Overhead is allocated based on direct labor hours. The predetermined variable overhead rate is $3.00 per direct labor hour. Depreciation of $21,100 per month is treated as fixed factory overhead. f. Sales representatives' commissions are 8% of sales and are paid in the month of the sales. The sales manager's monthly salary is $3,200. 9. Monthly general and administrative expenses include $14,000 administrative salaries and 0.7% monthly interest on the longterm 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). . 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. i. The minimum ending cash balance for all months is $42,000. If necessary, the company borrows enough cash using a shortterm note to reach the minimum. Short-term notes require an interest payment of 1% at each month-end (before any repayment). If the ending cash balance exceeds the minimum, the excess will be applied to repaying the short-term notes payable balance. k. Dividends of $12,000 are to be declared and paid in May. . No cash payments for income taxes are to be made during the second calendar quarter. Income tax will be assessed at 40% in the quarter and paid in the third calendar quarter. m. Equipment purchases of $132,000 are budgeted for the last day of June
