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The management of Zigby Manufacturing prepared the following balance sheet for March 31. Assets Cash Accounts receivable Raw materials inventory Finished goods inventory Equipment Less: Accumulated depreciation ZIGBY MANUFACTURING Balance Sheet March 31 Liabilities and Equity $ 40,000 Liabilities 344,400 Accounts payable 98,500 Loan payable 325,540 Long-term note payable Equity 450,000 Common stock Retained earnings $ 1,258,440 Total liabilities and equity $ 201, eee 12,000 500,000 $ 713,000 $ 600,000 150,000 335,000 210,440 545,440 $ 1,258,440 Total assets To prepare a master budget for April, May, and June, management gathers the following information. a. Sales for March total 20,500 units. Budgeted sales in units follow: April, 20,500; May, 19,500; June, 20,000, and July, 20,500. The product's selling price is $24.00 per unit and its total product cost is $19.85 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 4,925 pounds. The budgeted June 30 ending raw materials inventory is 4,000 pounds. Each finished unit requires 0.50 pound of direct materials d. dies IOI MICICI LOLAI 20,00 uuls. Duugeleu Sales In uns TONTOW. APIII, 20,00, may, 19,50V, June, 20,vvo, aru July, 20,50. ine product's selling price is $24.00 per unit and its total product cost is $19.85 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 4,925 pounds. The budgeted June 30 ending raw materials inventory is 4,000 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 16,400 units. d. Each finished unit requires 0.50 hour of direct labor at a rate of $15 per hour. e. The predetermined variable overhead rate is $2.70 per direct labor hour. Depreciation of $20,000 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 $3,000. g. Monthly general and administrative expenses include $12,000 for administrative salaries and 0.9% 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 $40,000. If necessary, the company borrows errugh 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 $10,000 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 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: 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. Req 1 Req 2. Req 3 Req 4 Reg 5 Reg 6 Req 7 Sales budget. ZIGBY MANUFACTURING Sales Budgets April 20,500 $ June May 19,500 $ 20,000 Budgeted sales units Selling price per unit Total budgeted sales $ 24.00 $ 24.00 $ 24.00 $ 492,000 $ 468,000 $ 480,000 Reg 1 Req 2 Reg 3 Reg 4 Reg 5 Reg 6 Reg 7 Req 8 to 10 Production budget. ZIGBY MANUFACTURING Production Budget April 20,500 May June Total 19,500 20,000 19,500 20,000 20,500 80% 80% 80% Budgeted sales units Calculation of desired ending inventory Next period budgeted sales units Ratio of inventory to future sales Add: Desired ending inventory Total required units Less: Beginning inventory units Units to produce 15,600 16,000 36,100 35,500 16,400 36,400 16,000 20,400 16,400 19,700 15,600 19,900 60,000 Reg 1 Reg 2 Req 3 Reg 4 Reg 5 Reg 6 Reg 7 Req 8 to 10 Reg 11 Raw materials budget. (Round per unit values to 2 decimal places.) ZIGBY MANUFACTURING Direct Materials Budget April May June Total 19,700 19,900 20,400 0.50 0.50 0.50 9,850 9,950 10,200 4,975 5,100 4,000 Units to produce Materials requirements per unit (pounds) Materials needed for production (pounds) Add: Desired ending inventory Total materials required (pounds) Less: Beginning materials inventory Materials to purchase (pounds) Materials cost per pound Cost of direct materials purchases 14,825 15,050 14,200 4,925 4,975 5,100 9,900 10,075 29,075 9,100 20 $ 20 $ 20 $ $ 20 $ 198,000 $ 201,500 $ 182,000 $ 581,500 Reg 1 Reg 2 Req DEEEEEEEEE. Req 4 | DUDE Req Reg 6 Reg 7 Reg 8E Direct labor budget. (Round per unit values to 2 decimal places.) ZIGBY MANUFACTURING Direct Labor Budget April May June Total 19,700 19,900 20,400 Units to produce Direct labor hours required per unit 0.50 0.50 0.50 Direct labor hours needed 9,850 9,950 10,200 30,000 Direct labor cost per hour $ 15 $ 15 $ 15 $ 15 Cost of direct labor $ 147,750 $ 149,250 $ CA 153,000 $ 450,000 Req 1 Req 2 Reg 3 Req 4 Reg 5 Reg 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 Variable overhead rate per direct labor hour Budgeted variable overhead Budgeted fixed overhead Budgeted total factory overhead