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 Assets Accounts receivable Raw materials inventory Finished goods inventory Equipment Less: Accumulated depreciation $ 1,920,000 480,000 Total assets ZIGBY MANUFACTURING Balance Sheet March 31 $128,000 Liabilities Liabilities and Equity $ 643,200 12,000 1,600,000 Accounts payable 1,102,080 315,200 Loan payable 1,041,728 Long-term note payable Equity 1,440,000 Common stock Retained earnings $ 2,255,200 $ 4,027,008 Total liabilities and equity To prepare a master budget for April, May, and June, management gathers the following information. 1,072,000 699,808 1,771,808 $ 4,027,008 a. Sales for March total 65,600 units. Budgeted sales in units follow: April, 65,600; May, 62,400; June, 64,000; and July, 65,600. 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 15,760 pounds. The budgeted June 30 ending raw materials inventory is 12,800 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 52,480 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 $64,000 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 $9,600. .9 u. Lach IINIShItu unil requin V. TUI UITCLLIADUI AL A TALT VI DIj pti fivui. cu e. The predetermined variable overhead rate is $2.70 per direct labor hour. Depreciation of $64,000 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 $9,600. g. Monthly general and administrative expenses include $38,400 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 $128,000. 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 $32,000 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 $320,000 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 $ 0 $ 0 < Req 1 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 62,400 64,000 65,600 80% 80% 80% < Req 1 Req 3 > 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 ZIGBY MANUFACTURING Direct Materials Budget April May June Materials needed for production (pounds) Total materials required (pounds) Materials to purchase (pounds) Materials cost per pound Cost of direct materials purchases 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 > 0 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 > Req 1 Req 2 Req 3 Req 4 Req 5 Req 6 Req 7 Req 8 to 10 Req 11 Req 12 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. Sales Cash receipts from Cash sales Collections of prior period sales Total cash receipts ZIBGY MANUFACTURING Schedule of Cash Receipts April May June $ 1,574,400 $ 1,497,600 $ 1,536,000 $ 0 $ 0 $ 0 Schedule of Cash Payments for Direct Materials Materials purchases Cash payments for Current period purchases Prior period purchases Total cash payments April May June $ 633,600 $ 644,800 $ 582,400 $ 0 $ 0 $ 0 Show less Beginning cash balance Total cash available Less: Cash payments for: Total cash payments Preliminary cash balance Ending cash balance Cash Budget April May June 0 0 0 Loan balance Beginning of month Additional loan (loan repayment) Loan balance - End of month Loan balance April May June $ 0 < Req 7 Req 11 > 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 0 0 $ 0 < ces Total assets Liabilities Equity Total Liabilities and Equity ZIGBY MANUFACTURING Budgeted Balance Sheet June 30 Assets Liabilities and Equity 0