Homework Chapter 7 i Saved Help Save & E Ch 4 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 13 points ZIGBY MANUFACTURING Estimated Balance Sheet March 31, 2017 Assets Cash Accounts receivable Raw materials inventory Finished goods inventory Total current assets Equipment, gros Accumulated depreciation Equipment, net Total assets $ 44,000 500,000 90,200 444,000 1,078,200 608,000 eBook (154,000) Print 454,000 $1,532,200 Liabilities and Equity $ 211,300 16,000 227,300 505,000 732,300 339,000 460,900 799,900 $1,532,200 Accounts payable Short-term notes payable Total current liabilities Long-term note payable Total liabilities Common stock Retained earnings Total stockholders' equity References Total liabilities and equity To prepare a master budget for April, May, and June of 2017, management gathers the following information a. Sales for March total 25,000 units. Forecasted sales in units are as follows: April, 25,000; May, 16,300; June, 21,100; and July 25,000. Sales of 244,000 units are forecasted for the entire year. The product's selling price is $25.00 per unit and its total product cost is $22.20 per unit. b. Company policy calls for a given month's ending raw materials inventory to equal 50% of the next month's materials requirements. The March 31 raw materials inventory is 4,510 units, which complies with the policy. The expected June 30 ending raw materials inventory is 4,400 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 unit sales Homework Chapter 7 G Saved Help Sa 4 c. Company policy calls for a given month's ending finished goods inventory to equal 80% of the next month's expected unit sales The March 31 finished goods inventory is 20,000 units, which complies with the policy d. Each finished unit requires 0.50 hours of direct labor at a rate of $19 per hour e. Overhead is allocated based on direct labor hours. The predetermined variable overhead rate is $3.10 per direct labor hour. f. Sales representatives' commissions are 6% of sales and are paid in the month of the sales. The sales manager's monthly salary is g. Monthly general and administrative expenses include $16,000 administrative salaries and 0.8% monthly interest on the long-term Depreciation of $23,920 per month is treated as fixed factory overhead $3,400 note payable following the sale (none are collected in the month of the sale). are fully paid in the next month. note to reach the minimum. Short-term notes require an interest payment of 1% at each month-end (before any repayment). If the 13 points -h. The company expects 20% of sales to be for cash and the remaining 80% on credit. Receivables are collected in full in the month eBook i. All raw materials purchases are on credit, and no payables arise from any other transactions. One month's raw materials purchases j. The minimum ending cash balance for all months is $44,000. If necessary, the company borrows enough cash using a short-term Print ending cash balance exceeds the minimum, the excess will be applied to repaying the short-term notes payable balance k. Dividends of $14,000 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 40% in the References quarter and paid in the third calendar quarter m. Equipment purchases of $134,000 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 dolla, except for the amount of cash sales, which should be rounded down to the nearest whole dollar.) . 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. Homework Chapter 7 6 Saved 4 Complete this question by entering your answers in the tabs below Required 1 Required 2 Required 3 Required 4 Required 5 Required 6 Required 7Required 8Required 9 Required 10 Cash budget. (Negative balances and Loan repayment amounts (if any) should be indicated with minus sign.) Calculation of Cash receipts from customers: 13 points May April June eBook Total budgeted sales Cash sales Sales on credit 20% Print 80% Total cash receipts from customer References May April June Current month's cash sales Collections of receivables ZIGBY MANUFACTURING Cash Budget April, May, and June 2017 May April June Beginning cash balance Cash receipts from customers Total cash available Cash payments for: Raw materials Direct labor Homework Chapter 7 6 Saved 4 Direct labor Variable overhead Sales commissions Sales salaries General & administrative salaries 13 points Loan interest Long-term note interest Purchases of equipment eBook Total cash payments Preliminary cash balance Additional loan (loan repayment) Ending cash balance Print References Loan balance May June April Loan balance Beginning of month Additional loan (loan repayment) Loan balance -End of month KRequired 7 Required 9