Problem 22-4A (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 Accounts receivable Assets ZIGBY MANUFACTURING Balance Sheet March 31 $ 168,000 Liabilities Liabilities and Equity 1,446,480 Accounts payable 413,700 Loan payable $ 844,200 12,000 1,367,268 Long-term note payable Equity 1,890,000 Raw materials inventory Finished goods inventory Equipment Less: Accumulated depreciation $ 2,520,000 630,000 Total assets Common stock Retained earnings $ 5,285,448 Total liabilities and equity To prepare a master budget for April, May, and June, management gathers the following information. 2,100,000 $2,956,200 1,407,000 922,248 2,329,248 $ 5,285,448 a. Sales for March total 86,100 units. Budgeted sales in units follow: April, 86,100; May, 81,900; June, 84,000; and July, 86,100. The product's selling price is $24.00 per unit and its total product cost is $19.85 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 20,685 pounds. The budgeted June 30 ending raw materials inventory is 16,800 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 68,880 units. d. Each finished unit requires 0.50 hour of direct labor at a rate of $15 per hour. e. The predetermined variable overhead rate is $2.70 per direct labor hour. Depreciation of $84,000 per month is the only fixed factory overhead item. f. Sales commissions of 8% of sales are paid in the month of the sales. The sales manager's monthly salary is $12,600. g. Monthly general and administrative expenses include $50,400 for administrative salaries and 0.9% monthly interest on the long- term note payable. h. The company budgets 30% of sales to be for cash and the remaining 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 materials purchases are on credit, and accounts payable are solely tied to raw materials purchases. Raw materials purchases are fully paid in the next month (none are paid in the month of purchase). j. The minimum ending cash balance for all months is $168,000. If necessary, the company borrows enough cash using a loan to reach the minimum. Loans require 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 $42,000 are budgeted to be declared and paid 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 paid in the third calendar quarter. m. Equipment purchases of $420,000 are budgeted for the last day of June. Required: 1. Sales budget. 2. Production budget. 3. Direct materials budget. 4. Direct labor budget. 5. Factory overhead budget. 6. Selling expense budget. 7. General and administrative expense budget. 8. Schedule of cash receipts. 9. Schedule of cash payments for direct materials.. 10. Cash budget. 11. Budgeted income statement for entire second quarter (not monthly). 12. Budgeted balance sheet at June 30. Complete this question by entering your answers in the tabs below. Req 1 Req 2 Req 3 Req 4 Req 5 Req 6 Req 7 Req 8 to 10 Req 11 Req 12 Sales budget. ZIGBY MANUFACTURING Sales Budgets April May June Budgeted sales units Selling price per unit Total budgeted sales $ 0 $ Req 1 $ 0 Req 2 > Complete this question by entering your answers in the tabs below. Req 1 Req 2 Req 3 Req 4 Req 5 Req 6 Req 7 Req 8 to 10 Req 11 Req 12 Production budget. Budgeted sales units Next period budgeted sales units Ratio of inventory to future sales Desired ending inventory units Total required units Units to produce ZIGBY MANUFACTURING Production Budget April May June Total 81,900 80% 84,000 86,100 80% 80% < Req 1 Req 3 > Complete this question by entering your answers in the tabs below. Req 1 Req 2 Req 3 Req 4 Req 5 Req 6 Req 7 Req 8 to 10 Req 11 Req 12 Direct materials budget. Note: Round per unit values to 2 decimal places. Units to produce Materials needed for production (pounds) Total materials required (pounds) Materials to purchase (pounds) Materials cost per pound Cost of direct materials purchases ZIGBY MANUFACTURING Direct Materials Budget April May June < Req 2 Req 4 > Complete this question by entering your answers in the tabs below. Req 1 Req 2 Req 3 Req 4 Req 5 Req 6 Req 7 Req 8 to 10 Req 11 Req 12 Direct labor budget. Note: Round per unit values to 2 decimal places. Units to produce Direct labor hours needed Cost of direct labor ZIGBY MANUFACTURING Direct Labor Budget April May June Total < Req 3 Req 5 > Complete this question by entering your answers in the tabs below. Req 1 Req 2 Req 3 Req 4 Req 5 Req 6 Req 7 Req 8 to 10 Req 11 Req 12 Factory overhead budget. Note: Round variable overhead rate values to 2 decimal places. Direct labor hours needed Variable overhead rate per direct labor hour Budgeted variable overhead Budgeted fixed overhead Budgeted total factory overhead ZIGBY MANUFACTURING Factory Overhead Budget April May June Total < Req 4 Req 6 > Complete this question by entering your answers in the tabs below. Req 1 Req 2 Req 3 Req 4 Req 5 Req 6 Req 7 Req 8 to 10 Req 11 Req 12 Selling expense budget. ZIGBY MANUFACTURING Selling Expense Budget April May June Budgeted sales Sales commissions < Req 5 Req 7 > Complete this question by entering your answers in the tabs below. Req 1 Req 2 Req 3 Req 4 Req 5 Req 6 Req 7 Req 8 to 10 Req 11 Req 12 General and administrative expense budget. ZIGBY MANUFACTURING General and Administrative Expense Budget April May June Total general and administrative expenses < Req 6 Req 8 to 10 > Complete this question by entering your answers in the tabs below. Req 1 Req 12 Req 2 Req 3 Req 4 Req 5 Req 6 Req 7 Req 8 to Req 11 10 8. Schedule of cash receipts. 9. Schedule of cash payments for direct materials. 10. Cash budget. Note: Negative balances and Loan repayment amounts (if any) should be indicated with minus sign. Enter $0 when applicable. Do not leave cells blank. ZIBGY MANUFACTURING Schedule of Cash Receipts Show less Sales April May June $ $ $ 2,066,400 1,965,600 2,016,000 Cash receipts from Cash sales Collections of prior period sales Total cash receipts S 0 $ 0 $ 0 Schedule of Cash Payments for Direct Materials April May June $ 831,600 $846,300 $ 764,400 Materials purchases Cash payments for Current period purchases Prior period purchases Total cash payments S 0 $ 0 $ Cash Budget April May June Beginning cash balance Total cash available Less: Cash payments for: Total cash payments Preliminary cash balance Ending cash balance 0 Loan balance April May June Loan balance - Beginning of month Additional loan (loan repayment) Loan balance - End of month $ 0 < Req 7 Req 11 > Complete this question by entering your answers in the tabs below. Req 1 Req 2 Req 3 Req 4 Req 5 Req 6 Req 7 Req 8 to 10 Req 11 Req 12 Budgeted income statement for entire second quarter (not monthly). Note: Round your final answers to the nearest whole dollar. ZIGBY MANUFACTURING Budgeted Income Statement For Three Months Ended June 30 Selling, general and administrative expenses Total operating expenses < Req 8 to 10 0 0 $ 0 Req 12 > Complete this question by entering your answers in the tabs below. Req 1 Req 2 Req 3 Req 4 Req 5 Req 6 Req 7 Req 8 to 10 Req 11 Req 12 Budgeted balance sheet at June 30. Note: Round your final answers to the nearest whole dollar. ZIGBY MANUFACTURING Budgeted Balance Sheet June 30 Assets Total assets Liabilities Equity Total Liabilities and Equity Liabilities and Equity 0 < Req 11 Req 12