NABAR MANUFACTURING
Estimated Balance Sheet
30-Jun-15
Assets	Liabilities and Equity
Cash	40,000	Accounts payable	51,400
Accounts receivable	249,900	Income taxes payable	10,000
Raw materials inventory	35,000	Shirt-term notes payable	24,000
Finished goods inventory	241,080	Total current liabilities	85,400
Total Current assets	565,980	Long-term note payable	300,000
Equipment, gross	720,000	Total liabilities	385,400
Accumulated depreciation	(240,000)	Common stock	600,000
Equipment, net	480,000	Retained earnings	60,580
Total stockholders' equity	660,580
Total Assets	1,045,980	Total liabilities and equity	1,045,980

To prepare a master budget for July, August and September 2015, management gathers the following information:
a.	Sales were 20,000 units in June. Forecasted sales in units are as follows: July, 21,000; August, 19,000; September,
20,000; October, 24,000. The product's selling price is $17 per unit and its total product cost is $14.35 per unit.
b.	Company policy calls for a given month's ending finished goods inventory to equal 70% of the next month's expected
unit sales. The June 30 finished goods inventory is 16,800 units, which does not comply with the policy.
c.	Company policy calls for a given month's ending raw materials inventory to equal 20% of the next month's material
requirements. The June 30 raw materials inventory is 4,375 units (which also fails to meet the policy). The budgeted
September 30 raw materials inventory is 1,980 units. Raw materials cost $8 per unit. Each finished unit requires
.50 units of raw materials.
d.	Each finished unit requires 0.50 hours of direct labor at a rate of $16 per hour.
e.	Overhead is allocated based on direct labor hours. The predetermined variable overhead rate is $1.35 per direct
labor hour. Depreciation of $20,000 per month is treated as fixed factory overhead.
f.	Monthly general and administrative expenses include $9,000 administrative salaries and .9% monthly interest on the
long-term note payable.
g.	Sales representatives' commissions are 10% of sales and are paid in the month of the sales. The sales manager's salary
is $3,500 per month.
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 is collected in the month of the sale).
i.	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.
j.	Dividends of $20,000 are to be declared and paid in August.
k.	Income taxes payable at June 30 will be paid in July. Income tax expense will be assessed at 35% in the quarter and paid
in October.
l.	Equipment purchases of $100,000 are budgeted for the last day of September
m.	The minimum ending cash balance for all months is $40,000. If necessary, the company borrows enough cash using a short-
term 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.
Prepare a master budget for NABAR Manufacturing for the period ending September 2015.