Problem 07-4A Manufacturing: Preparation of a complete master budget LO P1, P2, P3 The management of Zigby Manufacturing prepared the following estimated balance sheet for March 2019 ZIGBY MANUFACTURING Estimated Balance Sheet March 31, 2019 Assets Cash 99,000 Accounts receivable 500, 250 101,000 402,500 Raw materials inventory Finished goods inventory Total current assets 1,102,750 618,000 (159,000) 459,000 Equipment Accumulated depreciation Equipment, net $ 1,561,750 Total assets Liabilities and Equity Accounts payable Short-term notes payable 209,700 21,000 230,700 Total current liabilities Long-term note payable 505,000 735,700 Total liabilities 344,000 482,050 826,050 $ 1,561,750 Common stock Retained earnings Total stockholders' equity Total liabilities and equity To prepare a master budget for April, May, and June of 2019, management gathers the following information a. Sales for March total 23,000 units. Forecasted sales in units are as follows: April, 23,000; May, 19,000; June, 18,800; and July, 23,000. Sales of 249,000 units are forecasted for the entire year. The product's selling price is $29.00 per unit and its total product cost is $25.00 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 5,050 units, which complies with the policy. The expected June 30 ending raw materials inventory is 4,500 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 70% of the next month's expected unit sales The March 31 finished goods inventory is 16,100 units, which complies with the policy. d. Each finished unit requires 0.50 hours of direct labor at a rate of $24 per hour e. Overhead is allocated based on direct labor hours. The predetermined variable overhead rate is $3.60 per direct labor hour. Depreciation of $24,320 per month is treated as fixed factory overhead. f. Sales representatives' commissions are 10% of sales and are paid in the month of the sales. The sales manager's monthly salary is $3,900. a. Sales for March total 23,000 units. Forecasted sales in units are as follows: April, 23,000; May, 19,000; June, 18,800; and July, 23,000. Sales of 249,000 units are forecasted for the entire year. The product's selling price is $29.00 per unit and its total product cost is $25.00 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 5,050 units, which complies with the policy. The expected June 30 ending raw materials inventory is 4,500 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 70% of the next month's expected unit sales. The March 31 finished goods inventory is 16,100 units, which complies with the policy. d. Each finished unit requires 0.50 hours of direct labor at a rate of $24 per hour e. Overhead is allocated based on direct labor hours. The predetermined variable overhead rate is $3.60 per direct labor hour. Depreciation of $24,320 per month is treated as fixed factory overhead. f. Sales representatives' commissions are 10% of sales and are paid in the month of the sales. The sales manager's monthly salary is $3,900. g. Monthly general and administrative expenses include $10,000 administrative salaries and 0.8% monthly interest on the long-term note payable. h. The company expects 25% of sales to be for cash and the remaining 75% on credit. Receivables are collected in full in the month following the sale (none are 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. The minimum ending cash balance for all months is $110,000. 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. k. Dividends of $19,000 are to be declared and paid in May. I. 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 $139,000 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 dollar, except for the amount of cash sales, which should be rounded down to the nearest whole dollar.): 1. 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 prepared for the second calendar quarter, except as otherwise noted below. (Round calculations up to the nearest whole dollar, except for the amount of cash sales, which should be rounded down to the nearest whole dollar.): 1. 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. Complete this question by entering your answers in the tabs below. Required 6 Required 1 Required 2 Required 3 Required 4 Required 5 Required 9 Required 10 Required 7 Required 8 Sales budget. (Round Budgeted unit price to 2 decimal places.) ZIGBY MANUFACTURING Sales Budget April, May, and June 2019 Budgeted Budgeted Budgeted Sales Dollars Unit Sales Unit Price April 2019 May 2019 June 2019 Totals for the second quarter Required 1 Required 2 prepared for the second calendar quarter, except as otherwise noted below. (Round calculations up to the nearest whole dollar, except for the amount of cash sales, which should be rounded down to the nearest whole dollar.): 1. 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. Complete this question by entering your answers in the tabs below. Required 8 Required 1 Required 2 Required 3 Required 4 Required 5 Required 6 Required 9 Required 10 Required 7 Production budget. ZIGBY MANUFACTURING Production Budget April, May, and June 2019 June April May Next month's budgeted sales (units) 19,000 18,800 23,000 Ratio of inventory to future sales 70% 70% 70% Required units of available production Units to be produced Required 1 Required 3 prepared for the second calendar quarter, except as otherwise noted below. (Round calculations up to the nearest whole dollar, except for the amount of cash sales, which should be rounded down to the nearest whole dollar.): 1. 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. Complete this question by entering your answers in the tabs below. Required 3 Required 4 Required 8 Required 1 Required 2 Required 5 Required 9 Required 10 Required 6 Required 7 Raw materials budget. (Round per unit values to 2 decimal places.) ZIGBY MANUFACTURING Raw Materials Budget April, May, and June 2019 April May June Production budget (units) Materials needed for production Total materials requirements (units) Materials to be purchased Material price per unit Budgeted raw material purchases Required 2 Required 4 prepared for the second calendar quarter, except as otherwise noted below. (Round calculations up to the nearest whole dollar, except for the amount of cash sales, which should be rounded down to the nearest whole dollar.): 1. 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. Complete this question by entering your answers in the tabs below. Required 4 Required 8 Required 1 Required 2 Required 3 Required 5 Required 6 Required 9 Required 10 Required 7 Direct labor budget. (Round per unit values to 2 decimal places.) ZIGBY MANUFACTURING Direct Labor Budget April, May, and June 2019 April May June Total Budgeted production (units) Total labor hours needed Budgeted direct labor cost Required 3 Required 5 prepared for the second calendar quarter, except as otherwise noted below. (Round calculations up to the nearest whole dollar, except for the amount of cash sales, which should be rounded down to the nearest whole dollar.): 1. 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. Complete this question by entering your answers in the tabs below. Required 4 Required 5 Required 6 Required 1 Required 2 Required 3 Required 9 Required 10 Required 7 Required 8 Factory overhead budget. (Round per unit values to 2 decimal places.) ZIGBY MANUFACTURING Factory Overhead Budget April, May, and June 2019 April May June Total Labor hours needed Budgeted variable overhead Budgeted fixed overhead Budgeted total overhead Required 4 Required 6 prepared for the second calendar quarter, except as otherwise noted below. (Round calculations up to the nearest whole dollar, except for the amount of cash sales, which should be rounded down to the nearest whole dollar.): 1. 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. Complete this question by entering your answers in the tabs below. Required 5 Required 6 Required 8 Required 1 Required 2 Required 3 Required 4 Required 7 Required 9 Required 10 Selling expense budget. ZIGBY MANUFACTURING Selling Expense Budget April, May, and June 2019 April May June Budgeted sales Sales commissions Required 5 Required 7 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 dollar, except for the amount of cash sales, which should be rounded down to the nearest whole dollar.): 1. 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. Complete this question by entering your answers in the tabs below. Required 7 Required 8 Required 1 Required 2 Required 3 Required 4 Required 5 Required 6 Required 9 Required 10 General and administrative expense budget. ZIGBY MANUFACTURING General and Administrative Expense Budget April, May, and June 2019 April May June Total budgeted G&A expenses Required 6 Required 8 Calculation of Cash receipts from customers: April May June Total budgeted sales Cash sales 25% Sales on credit 0 Total cash receipts from customers Current month's cash sales Collections of receivables Total cash receipts ZIGBY MANUFACTURING Cash Budget April, May, and June 2019 April May June Beginning cash balance Total cash available Cash payments for Total cash payments Preliminary cash balance ZIGBY MANUFACTURING Cash Budget April, May, and June 2019 April May June Beginning cash balance Total cash available Cash payments for Total cash payments Preliminary cash balance Ending cash balance Loan balance April May June Loan balance - Beginning of month Additional loan (loan repayment) Loan balance End of month Required 9 Required 7 General dd duffiiistfaive expense buaget. 8. Cash budget. 9. Budgeted income statement for the entire second quarter (not for each month separately) 10. Budgeted balance sheet. Complete this question by entering your answers in the tabs below. Required 9 Required 10 Required 7 Required 1 Required 2 Required 3 Required 5 Required 6 Required 4 Required 8 Budgeted income statement for the entire second quarter (not for each month separately). (Round your final answers to the nearest whole dollar.) ZIGBY MANUFACTURING Budgeted Income Statement For Three Months Ended June 30, 2019 Operating expenses Total operating expenses Required 8 Required 10 Required 9 Required 10 Required 6 Required 8 Required 1 Required 2 Required 3 Required 4 Required 5 Required 7 Budgeted balance sheet. (Round your final answers to the nearest whole dollar.) ZIGBY MANUFACTURING Budgeted Balance Sheet June 30, 2019 Assets Total current assets Equipment, net Total assets Liabilities and Equity Liabilities Total current liabilities Stockholders' Equity Total Stockholders' Equity Total Liabilities and Equity Required 9 Required 10