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Please help with the problems listed above. To prepare a master budget for April, May, and June, management gathers the following Information. a. Sales for
Please help with the problems listed above.
To prepare a master budget for April, May, and June, management gathers the following Information. a. Sales for March total 73,800 unlts. Budgeted sales In unlts follow: Aprll, 73,800; May, 70,200; June, 72,000; and July, 73,800. The product's selling price is $24.00 per unlt and its total product cost is $19.85 per unit. b. Raw materlals Inventory consists solely of direct materlals that cost $20 per pound. Company policy calls for a given month's ending materlals Irventory to equal 50% of the next month's direct materlals requirements. The March 31 raw materlals Inventory is 17,730 pounds. The budgeted June 30 ending raw materlals Inventory is 14,400 pounds. Each finlshed unlt requires 0.50 pound of direct materlals. c. Company policy calls for a given month's ending finlshed goods Inventory to equal 80% of the next month's budgeted unit sales. The March 31 finished goods inventory is 59,040 units. d. Each finlshed unlt requires 0.50 hour of direct labor at a rate of $15 per hour. e. The predetermined varlable overhead rate is $2.70 per direct labor hour. Depreclation of $72,000 per month is the only fixed factory overhead Item. f. Sales commissions of 8% of sales are pald in the month of the sales. The sales manager's monthly salary is $10,800. g. Monthly general and administratlve expenses Include $43,200 for administratlve salarles and 0.9% monthly Interest on the longterm note payable. h. The company budgets 30% of sales to be for cash and the remalning 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 materlals purchases are on credit, and accounts payable are solely tled to raw materlals purchases. Raw materlals purchases are fully pald in the next month (none are pald in the month of purchase). J. The minimum ending cash balance for all months is $144,000. If necessary, the company borrows enough cash using a loan to reach the minimum. Loans requlre 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 $36,000 are budgeted to be declared and pald in May. I. 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 pald in the third calendar quarter. m. Equipment purchases of $360,000 are budgeted for the last day of June. \begin{tabular}{|c|c|c|c|c|} \hline \multicolumn{5}{|c|}{ ZIGBY MANUFACTURING } \\ \hline \multicolumn{5}{|c|}{ Direct Materials Budget } \\ \hline & April & May & June & Total \\ \hline Units to produce & 70,920 & 71,6400 & 73,440 & \\ \hline \begin{tabular}{|l|l|} Materials required per unit (pounds) \\ \end{tabular} & 0.50 & 0.500 & 0.50 & \\ \hline \begin{tabular}{l} Materials needed for production \\ (pounds) \end{tabular} & 35,460 & 35,820 & 36,720 & \\ \hline Less: Desired ending inventory & 17,910 & 18,3600 & 14,4000 & \\ \hline Total materials required (pounds) & 53,370 & 54,180 & 51,120 & \\ \hline Add: Beginning materials inventory & 17,730 & 17,8100 & 18,360 & \\ \hline Materials to purchase (pounds) & 35,6400 & 36,2700 & 32,7600 & 104,670 \\ \hline Materials cost per pound & 200 & 200 & 200 & 20 \\ \hline Cost of direct materials purchases & 712,800 & 725,400 & 655,200 & $2,093,400 \\ \hline \end{tabular} Req 2 Req 4 \begin{tabular}{|c|c|c|c|} \hline \multicolumn{4}{|c|}{ ZIGBY MANUFACTURING } \\ \hline \multicolumn{4}{|c|}{ Budgeted Income Statement } \\ \hline \multicolumn{4}{|c|}{ For Three Months Ended June 30} \\ \hline Sales & 0 & & $5,184,000 \\ \hline Cost of goods sold & 0 & & 4,287,600 \\ \hline Gross profit: & 0 & & 896,4000 \\ \hline \multicolumn{4}{|l|}{ Seling, general and administrative expenses } \\ \hline Raw materials inventory & x & $2,093,400 & \\ \hline Accounts payable & x & 1,620,000x & \\ \hline Sales salaries expense & & 291,600 & \\ \hline Sales commissions expense & & 447,120 & \\ \hline General administrative salaries expense & & 178,200x & \\ \hline Retained earnings & x & 36,000 & \\ \hline Total operating expenses & & & 4,686,320 \\ \hline Net income & x & & (3,769,920) \\ \hline Income taxes payable & x & & 216,000 \\ \hline Net income & 0 & & \begin{tabular}{l} 5 \\ (3,985,920) \end{tabular} \\ \hline \end{tabular}Step by Step Solution
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