Problem 20-4A 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 $ 80,000 Accounts receivable 364,000 Raw materials inventory 96,000 Finished goods Inventory 364,800 Total current assets 984,800 Equipment 610,000 Accumulated depreciation (155,000) Equipment, net 455,000 Total assets $1,359,800 Liabilities and Equity Accounts payable $ 195,500 t-tern notes payable 17,000 Total current liabilities 212,500 Long-tern note payable 510,000 Total abilities 722,500 Common stock 340,000 Retained earnings 297/300 Total stockholders' equity 637/100 Total liabilities and equity $1,359,800 To prepare a master budget for April, May, and June of 2019, management gathers the following information a. Sales for March total 20,000 units. Forecasted sales in units are as follows: April 20,000; May 19,000: June, 19,500; and July 20,000 Sales of 245,000 units are forecasted for the entire year. The product's selling price is $26.00 per unit and its total product cost is $22.80 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 4,800 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 80% of the next month's expected unit sales. The March 31 finished goods Inventory is 16,000 units, which complies with the policy. d. Each finished unit requires 0.50 hours of direct laborat a rate of $20 per hour. e. Overhead is allocated based on direct labor hours. The predetermined variable overhead rate is $3.20 per direct labor hour. Depreciation of $23,400 per month is treated as fixed factory overhead. + Sales representatives' commissions are 6% of sales and are paid in the month of the sales. The sales manager's monthly salary is $3.500 g. Monthly general and administrative expenses include $17000 administrative salaries and 0.9% monthly interest on the long-term note payable. 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 are collected in the month of the sale). 1. All raw materials purchases are on credit, and no payables arise from any other transactions. One month's raw materials purchases Luvv ARCO VI TUUUU UIE TUILUCIJI U MIC CU MIC prvus R. PHIL IPv cost is $22.80 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 4,800 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 80% of the next month's expected unit sales The March 31 finished goods inventory is 16,000 units, which complies with the policy. d. Each finished unit requires 0.50 hours of direct labor at a rate of $20 per hour. e. Overhead is allocated based on direct labor hours. The predetermined variable overhead rate is $3.20 per direct labor hour. Depreciation of $23,400 per month is treated as fixed factory overhead. 1. Sales representatives' commissions are 6% of sales and are paid in the month of the sales. The sales manager's monthly salary is $3,500. g. Monthly general and administrative expenses include $17,000 administrative salaries and 0.9% monthly interest on the long-term note payable 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 are collected in the month of the sale). 1. 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 $45,000. 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 $15,000 are to be declared and paid in May. 1. No cash payments for income taxes are to be made during the second calendar quarter. Income tax will be assessed at 35% in the quarter and paid in the third calendar quarter m. Equipment purchases of $135,000 are budgeted for the last day of June. Required: Prepare the following budgets and other financial information as required. All budgits 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: Total budgeted sales Cash sales Sales on credit 30% 70% $ 520,000 $ 494,000$ 507,000 156,000 148,200 152, 100 $ 354,000$ 345,800 $ 354,900 Current month's cash salos Collections of receivables Total cash receipts Total cash receipts from customers April May June $ 155,000 $ 148.200 152,100 384,000 364,000 345,800 $ 520,000 $ 512,200 $ 497.900 ZIGBY MANUFACTURING Cash Budget April, May, and June 2019 April May S 80,000 $108,320 520,000 512,200 600,000 620,520 June $ 132,750 497.900 630,650 Beginning cash balance Cash receipts from customers Total cash available Cash payments for Raw materials Direct labor Variable overhead Sales commissions Sales salaries General & administrative salaries Long-term not interest Dividends Purchases of equipment OOOOOOOOO 195,500 192,000 30,720 31,200 3,500 193,000 194,000 31,040 29,640 3,500 196,500 190,000 31,840 30.420 3,500 17.000 17,000 4,590 17.000 4,590 15,000 4,590 135,000 Total cash payments Preliminary cash balance Additional loan doan repayment) Ending cash balance 474,510 487,770 125,490 132,750 17.170 0 108,320 $ 132,750 617.850 12,800 242,600 $ 255,400 Loan balance April $ 17,000 May Juno Loan balance - Beginning of month S 0 $ 0 Prev Budgeted balance sheet. (Round your final answers to the nearest whole dollar.) ZIGBY MANUFACTURING Budgeted Balance Sheet June 30, 2019 Assets $ 242,600 354,900 90,000 364,800 1,052,300 $ 745,000 (225,200) 519,800 $ 1,572.100 Cash Accounts receivable Raw materials inventory Finished goods inventory Total current assets Equipment Accumulated depreciation Equipment, net Total assets Liabilities and Equity Liabilities Accounts payable Bank loan payable Income taxes payable Total current liabilities Long-term note payable Stockholders' Equity Common stock Retained earnings Total Stockholders' Equity Total Liabilities and Equity >IS B $ 189,500 229,800 X 1,925 421,225 510,000 $ 340,000 300,875 640,875 1,572,100 IS B $ 189,500 229,800 X 1,925 421,225 510,000 $ 340,000 300,875 640,875 1,572,100