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 2017 ZIGBY MANUFACTURING Estimated Balance Sheet March 31, 2017 Assets $42,000 364,000 107,200 349,440 862,640 604,000 Cash Accounts receivable Raw materials inventory Finished goods inventory Total current assets Equipment, gross Accumulated depreciation Equipment, net Total assets (152,000) 452, 000 $1,314,640 Liabilities and Equity $ 211, 300 14,000 225,300 510,000 735,300 337,000 242,340 579,340 $1,314, 640 Accounts payable Short-term notes payable Total current liabilities Long-term note payable Total liabilities Common stock Retained earnings Total stockholders' equity Total liabilities and equity To prepare a master budget for April, May, and June of 2017, management gathers the following information: a. Sales for March total 20,800 units. Forecasted sales in units are as follows: April, 20,800; May, 21,600;, June, 20,900; and July 20,800. Sales of 242,000 units are forecasted for the entire year. The product's selling price is $25.00 per unit and its total product cost is $21.00 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 5,360 units, which complies with the policy. The expected June 30 ending raw materials inventory is 4,200 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 16,640 units, which complies with the policy. d. Each finished unit requires 0.50 hours of direct labor at a rate of $17 per hour e. Overhead is allocated based on direct labor hours. The predetermined variable overhead rate is $3.00 per direct labor hour. Depreciation of $21,100 per month is treated as fixed factory overhead. $3,200 note payable following the sale (none are collected in the month of the sale). are fully paid in the next month. note to reach the minimum. Short-term notes require an interest payment of 1% at each month-end (before any repayment). If the f. Sales representatives, commissions are 8% of sales and are paid in the month of the sales. The sales manager's monthly salary is : g. Monthly general and administrative expenses include $14,000 administrative salaries and 07% monthly interest on the long-term 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 : i. All raw materials purchases are on credit, and no payables arise from any other transactions. One month's raw materials purchases j. The minimum ending cash balance for all months is $42,000. If necessary, the company borrows enough cash using a short-term ending cash balance exceeds the minimum, the excess will be applied to repaying the short-term notes payable balance k. Dividends of $12,000 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 $132,000 are budgeted for the last day of June 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 1 Required 2 Required 3 Required 4 Required 5 Required 6 Required 7 Required 8 Required 9 Required 10 Sales budget. (Round Budgeted unit price to 2 decimal places.) ZIGBY MANUFACTURING Sales Budget April, May, and June 2017 Budgeted Budgeted Budgeted Unit Sales Unit Price Sales Dollars April 2017 May 2017 June 2017 Totals for the second quarter Required 1 Required 2 > Required 1 Required 2 Required 3 Required 4 Required 5 Required 6 Required 7 Required 8 Required 9 Required 10 Production budget. ZIGBY MANUFACTURING Production Budget April, May, and June 2017 May June April 20,900 21,600 20,800 Next month's budgeted sales (units) Ratio of inventory to future sales 80% 80% 80% Required units of available production Units to be produced Required 1 Required 3 Complete this question by entering your answers in the tabs below. Required 1 Required 21 Required 3 Required 4 Required 5 Required 6 Required 7 Required 8 Required 9 Required 10 Raw materials budget. (Round per unit values to 2 decimal places.) ZIGBY MANUFACTURING Raw Materials Budget April, May, and June 2017 May April June Production budget (units) Materials needed for production Total materials requirements (units) Materials to be purchased Material price per unit Budgeted raw material purchases Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Required 5Required 6 Required 7 Required 8 Required 9 Required 10 Direct labor budget. (Round per unit values to 2 decimal places.) ZIGBY MANUFACTURING Direct Labor Budget April, May, and June 2017 May June Total April Budgeted production (units) Total labor hours needed Budgeted direct labor cost Complete this question by entering your answers in the tabs below Required 1 Required 2 Required 3 Required 4 Required 5 Required 6 Required 7Required 8 Required 9 Required 10 Factory overhead budget. (Round per unit values to 2 decimal places.) ZIGBY MANUFACTURING Factory Overhead Budget April, May, and June 2017 Total May June April Labor hours needed Budgeted variable overhead Budgeted fixed overhead Budgeted total overhead Complete this question by entering your answers in the tabs below Required 1 Required 2 Required 3 Required 4 Required 5 Required 6 Required 7 Required 8 Required 9 Required 10 Selling expense budget. ZIGBY MANUFACTURING Selling Expense Budget April, May, and June 2017 May April June Budgeted sales Sales commissions Complete this question by entering your answers in the tabs below Required 1 Required 2 Required 3 Required 4 Required 5 Required 6 Required 7 Required 8 Required 9 Required 10 General and administrative expense budget. ZIGBY MANUFACTURING General and Administrative Expense Budgets April, May, and June 2017 May June April Total budgeted G&A expenses Complete this question by entering your answers in the tabs below. Required Required 2 Required 3 Required 4 Required 5Required Required 7 Required Required Required 10 Cash budget. (Negative balances and Loan repayment amounts (if any) should be indicated with minus sign.) Calculation of Cash receipts from customers: Total budgeted sales Cash sales Sales on credit 30% 70% Total cash receipts from customers June Current month's cash sales Collections of receivables ZIGBY MANUFACTURING Cash Budget April, May, and June 2017 April May June Beginning cash balance Total cash available Cash payments for: Total cash payments Preliminary cash balance Ending cash balance Loan balance April June Loan balance Beginning of month Additional loan (loan repayment) Loan balance End of month Required 7 Required 9 > Complete this question by entering your answers in the tabs below Required 1 Required 2 Required 3 Required 4 Required 5 Required 6 Required 7 Required 8 Required 9 Required 10 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, 2017 Operating expenses Total operating expenses Required 1 Required 2 Required 3 Required 4 Required 5 Required 6Required 7 Required 8 quied 9 Required 10 Budgeted balance sheet. (Round your final answers to the nearest whole dollar.) ZIGBY MANUFACTURING Budgeted Balance Sheet June 30, 2017 Assets Total current assets Equipment, net Total assets Liabilities and Equity Liabilities Total current liabilities Stockholders' Equity Total Stockholders' Equity Total Liabilities and Equity