Problem 20-4A (Algo) Manufacturing: Preparation of a complete master budget LO P1, P2, P3 The management of Zigby Manufacturing prepared the following balance sheet for March 31 Cash Assets ZIGBY MANUFACTURING Balance Sheet March 31 $ 57,000 Liabilities Liabilities and Equity Accounts receivable Raw materials inventory 406,000 Accounts payable $206,300 91,600 Loan payable 29,000 Finished goods inventory 380,480 Long-term note payable 500,000 $735,300 Equipment $634,000 Equity Less: Accumulated depreciation 167,000 467,000 Common stock Retained earnings 352,000 314,700 Total assets $1,402,000 Total liabilities and equity 666,780 $1,402,000 To prepare a master budget for April, May, and June, management gathers the following information a. Sales for March total 23,200 units Budgeted sales in units follow: April, 23,200, May, 17100, June, 21,900, and July, 23,200 The product's selling price is $25.00 per unit and its total product cost is $20.50 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 4,580 pounds. The budgeted June 30 ending raw materials inventory is 5,700 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 18,560 units d. Each finished unit requires 0.50 hour of direct labor at a rate of $13 per hour e. The predetermined variable overhead rate is $4.40 per direct labor hour. Depreciation of $37,320 per month is the only fixed factory overhead item.